Sky have come out swinging today against Openreach, a subsidiary of BT which is tasked with connecting customers to their local telephone exchange, and therefore connect them to the Internet. Originally, this service was run for profit as a monopoly by BT, but undertakings with Ofcom in September 2005 ensured that the business was forced to offer its services wholesale to other Internet providers, and therefore the number of companies selling broadband expanded massively.
Today, Sky is calling on Ofcom again to instigate a full market investigation against Openreach to examine the problems that affect customers in the UK broadband market every single day. Sky believe that issues of both quality and competition are sufficient to get the investigation underway, and the Competition and Markets Authority (CMA) should conduct the enquiry.
In their submission to Ofcom, Sky sets out the details of the standard of service being delivered to customers by Openreach, which is solely tasked with operating and maintaining the UK's national telecoms network. The evidence highlights how historical under-investment has led to a disastrous experience for customers. Amongst these faults are an excessive number of network faults, failure to meet targets for repairing faults, long waits to have new lines installed, appointments that are missed and jobs that are not completed.
The key findings of their submission include:
Sky represents around one third of all broadband customers which rely on the Openreach network to exist, so if it's experience is typical (which it should be), then the overall impact to customers routed through Openreach will be three times higher than what is stated above. Sky consider the brunt of the problems to come from lack of investment in the 'last-mile' or 'access' copper infrastructure that connects individual homes to the Openreach network. Alongside it's own research, Sky have commissioned research by independent firm Frontier Economics which shows years of declining investment in maintaining the copper network.
Sky are also concerned that the Openreach deal which was struck in 2005 will inhibit competition within the broadband space, with new ideas and business models being crushed under the weight of BT's total dominance of the fibre network. Indeed, Sky's customers have said the same on the Sky telephone number, and so it appears like the time is at hand to petition Ofcom.
Mai Fyfield, Sky’s Chief Strategy Officer, said:“We are drawing attention to the problems in broadband because they are important to the economy as a whole. They affect competition between providers and have a direct impact on consumers and small businesses, resulting in inconvenience, dissatisfaction and loss of productivity. The UK needs to get the basics right in broadband as well as develop the networks and services of the future.”
“We believe that Ofcom should move quickly to ask the Competition and Markets Authority (CMA) to undertake a full competition inquiry. A reference to the CMA would allow these vital issues to be examined with increased speed and thoroughness by a body with the powers to take whatever action should be deemed necessary. Given the rapid changes taking place in the sector, we believe this should happen as soon as possible.”
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