The lack of fibre could cost BT dear!

BT may loose Openreach because of under investment in fibre.

Edited by Michael_Chare (Sat 23-Jan-16 06:19:25)

Stupid article.

The house of commons data which is almost half the report is from May 2015 which puts a bit flaw in any conclusions on failure of projects as a lot has happened since then

On selling Openreach, you need to find a buyer and based on that report a buyer willing to fund 100% FTTH roll-out after having paid for the Openreach assets and over what time frame do we force the FTTH roll-out?

Put it this way, the major shareholders in BT Group will want appropriate compensation and then the shareholders of who ever buys Openreach will look for a reasonable ROI.

The most likely result of such a split would cost the customer dear!

1. the lesson of Railtrack/Network rail chaos is clearly lost on those wanting a separate infrastructure owner.

2. The lessons of British Gas/Transco is another one. When they were all one as British Gas if you wanted a gas main put then B.Gas would do so for a small fee in the sure knowledge of many decades of revenue from the new service to offset their capital expenses in putting in the main.
Then they were all separated out with Transco created to run the gas infrastructure alone and all retail groups like B.Gas now concentrating on just supplying the gas in the pipe.
So now if you want a gas main put in you pay the full commercial cost of putting it in, as Trasco will derive no future revenue from the gas in it at all.

You mean the retailers don't pay National Grid for the use and maintenance of the network? Presumably as a non-profit-making organisation it also has charitable status, so won't be paying the staff much.

For instance the CEO only got £5-6 million last year.

The majority of people don't seem to care how their broadband is delivered providing it is of good quality, reliable and consistent, they simply don't understand the technicalities of it.

Its a shame the same amount of focus on splitting up BT/Openreach isn't applied to shutting down tax loopholes to stop major tech companies moving all their profits out of the UK in order to avoid paying UK corporation tax. These tech companies are benefitting massively from this surge in broadband dependance and putting nothing back into the economy. The tax avoided by the big tech companies over the past years would have probably paid BDUK funding many times over.

We can see the way things are going. The pressure on Ofcom/gov to decree a sell off will become unstoppable

What else can we see?

BT will sell, making a shed load

The buyer will probably be French

Performance will fall as Openreach is restructured by new owners

Bills will go up

But it's going to happen

Does this cross-party committee who paid for this report have a website with meeting minutes and such like?

What are the credentials of the consultants and experts who provided their 'opinion' into this report?

Mr Shapps twitter feed is interesting at the moment, see https://twitter.com/grantshapps

In particular his link to https://audioboom.com/boos/4096465-bt-press-office which he says :
"the experts in the BT Openreach Press Office call .. but fail to put down the phone, inadvertently leaving this recording on the answering machine. Their attitude reveals contempt for Openreach customers suffering poor broadband speeds. See what you think."

They purely poke fun at the infantile attempt at humour where the ministers have named the report to be about Broadbad ... the contempt was for the ministers and the report, not for the customers.

Edited by godsell4 (Sat 23-Jan-16 10:43:51)

It doesn't need to be sold of course. It could "just" be separated with the existing shareholders holding stakes in the company in the manner that O2 was split. I say "just" as there are enormously complex legal & financial issues to sort out on allocation of debt, pension deficit liabilities, IPRs and much else.

However, if it was separated out, what the report doesn't pin down is exactly how that will change incentives. OR will be a £5bn a year yet this group of MPs want it to finance what would be a £20-25bn FTTP programme to be done in a short timescale (where would the workforce come from?). Where would investors come from to stump up the cash required unless the market fundamentals were changed? Why would OR pump capex into areas where there's no prospect of a return? The issues would surely just remain the same. OR have to react to VM quickly (which really means g.fast in urban areas as it's relatively quick to implement with least disruption) and rural areas are not suddenly going to find that OR has suddenly got a pot of gold to deal with their issues.

In other words, an OR separation on its own changes nothing.

nb. the report has basic errors. For instance, it says that BT has received £1.7bn from BDUK whilst the accounts show about £700m so far.

Edited by deleted (Sat 23-Jan-16 10:57:33)