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By | Kat Hall 15th February 2016 10:03

Ofcom must tackle 'monopolistic' provider BT, says shadow digital minister Chi Onwurah

'Unacceptable' for sub-1Mbps internet speeds in 2016

Shadow digital economy minister and former Ofcom head Chi Onwurah has called on the communications regulator to tackle BT’s hold on the broadband market, ahead of its major sector review next week.

Speaking to The Register, Onwurah said it is imperative that the once-in-a-decade review addresses the nationwide lack of superfast broadband.

“If we are still in the situation where people are unable to get basic broadband, that would be even more of a failure than it is now. There are people in Rotherhithe in London – 100 yards [sic] from Canary Wharf – who can’t get 1mbps. I mean it’s 2016 – that’s unacceptable.”

Digital connectivity must be a priority, with a proper plan to roll out networks, according to Onwurah. "I think we should be looking at fibre to the home, although that doesn’t seem to be BT’s view.”

As former telecoms technology head at Ofcom, Onwurah helped write the regulator’s last review of the sector, which created the operational separation of Openreach from BT. She said the body should have also included superfast broadband investment commitments for Openreach.

“We didn’t regulate next-generation broadband. Partly on the basis that you don’t regulate emerging markets. But we should have looked more at the investment path for super fast broadband and fibre to the home."

She commented that BT's current focus on fibre to the cabinet "is probably a symptom of a lack of competition, because if other people were rolling out networks they might not be so complacent."

Onwurah noted a lot of hard work went into the previous review which was an ambitious document "but in hindsight Openreach's investment in infrastructure is a key issue now, which is why Grant Shapps is calling for it to be split up."

However, she did not add her name to the recent report led by Shapps, and signed by more than 100 MPs, calling for Ofcom to refer Openreach to the Competition and Markets Authority for separation.

“With the greatest respect to MPs, I don’t think we have the evidence we need to determine whether splitting Openreach off will cure the problem. They looked at the symptoms of the problem... but that is also letting the government off the hook."

Onwurah blames the government for handing £1.7bn to BT in the first place. "By doing so they hoped to get a quick rollout and [former culture secretary] Jeremy Hunt could hold his head up when visiting South Korea."

She added: "That is stupidity on a colossal scale. It will go down as one of the biggest governmental cock-ups.”

“Thanks to that,” Onwurah continued, “we do now effectively have a monopolistic provider of next generation infrastructure. I do think there is a strong case for a referral to the CMA. But I also think it is up to Ofcom on the evidence to that. It is not for the government to tell it not to do, like [culture minister] Ed Vaizey did back in August, or for MPs to displace their anger from the real guilty party and onto Openreach."

As it stands, the UK does not currently have a "well functioning market,” she added. "When you have many people still waiting for decent broadband, local authorities with no forward information about where broadband is going to be rolled out, and innovative new suppliers finding their markets taken away by BT when Openreach rolls out in places where they said they wouldn’t previously: all of that suggests it’s something worth investigating.”

Onwurah said she was surprised that the BT/EE deal went ahead without any noise from the regulators, given Ofcom's recent public objections to the proposed O2/Three merger. "If they are expressing concerns about the lack of competition in mobile delivery, then I would hope they are equally concerned about the lack of competition in broadband infrastructure."

If a decision is not taken to refer Openreach to the CMA next week, then Ofcom will need to outline a number of appropriate interventions, she said.

"They are going to have to made a very good case for how we ensure competition. But if they have given up on competition and swallowed some line about how monopolies invest better than competitive markets, then I will be outraged,” warned Onwurah. “They need to send a clear signal.”

In response to Onwurah’s comments, a BT spokesman said the UK is widely regarded as having one of the most competitive and highly regulated telecoms markets in the world – with some of the lowest prices. "At an infrastructure level, Virgin Media and many other independent networks compete with Openreach across large swathes of the country.”

He added: "The shadow minister is right to highlight how we’ve upgraded the vast majority of the UK with Fibre to the Cabinet technology, and that’s because it could deliver superfast speeds to more homes and businesses in the fastest possible time.

He said building fibre to the home would have cost five times as much and would take five times as long. "It would also be completely unnecessary, given we’re now pioneering ambitious plans to get ultrafast speeds to most of the UK using innovative G.fast technology." ®

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