BT is "significantly under investing" in its network arm Openreach and should face structural separation if it does not commit to remedying the shortfall, according to a parliamentary report. The report on 'Establishing world-class connectivity throughout the UK' was commissioned by the Culture, Media and Sport Committee from a panel of independent experts, and comes as UK regulator Ofcom considers imposing stricter regulation on BT and its wholesale subsidiary.
The report found that capital investment in Openreach has been broadly flat since 2009, and quality of service remains poor. The Committee is demanding that BT invest significantly more in Openreach, and allow Openreach much more autonomy over what it invests, when and where. It supports Ofcom's plans for establishing greater separation between Openreach and BT Group and said that if BT fails to "offer the reforms and investment assurances necessary to satisfy our concerns", Ofcom should move to enforce full separation of Openreach.
The Committee also wants Ofcom to take a tougher stance on improving Openreach's quality of service, an issue of constant complaint from BT's rivals, saying the company should face the prospect of stiffer penalties in order to encourage more investment. The report accused BT of stifling local competition and network planning due to a lack of transparency over its role in the BDUK government programme for upgrading broadband networks.
In addition, it accused BT of exploiting its vertical integration and the utility-like assets of Openreach to cross-subsidise more high-risk activities in the group, while neglecting investment in the profitable Openreach infrastructure.
Other recommendations from the report include expanding the universal service obligation to include broadband and closer work at BDUK with local communities to reach the 'final 5 percent' of homes and businesses without fast broadband.
