UPDATED: BT & Openreach broadband slammed by MPs as calls for breakup grow

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UPDATED WITH NEW FIGURES

A damning report has criticised the broadband quality and speed provided by BT and its standalone infrastructure subsidiary, Openreach, and demanded the cutting of all ties between the two companies for the good of the UK economy.

The report, ‘Broadbad’, is published by the British Infrastructure Group (BIG), a cross-party MPs’ group dedicated to improving the national infrastructure. [The full report can be downloaded here.] According to the BIG, “systemic underinvestment” stemming from the “natural monopoly” of BT and Openreach is “stifling competition, hurting constituents, and limiting Britain’s business and economic potential”.

More, the report claims that the broadband service provided to many customers is so unreliable and slow that it is potentially losing UK plc as much as £11 billion per annum.

“Unless BT and Openreach are formally separated to become two entirely independent companies, little will change,” says the report. “Openreach makes vast profits and finds little reason to invest in the network, install new lines, or even fix faults in a properly timely manner.”

Openreach’s 2015 operating profit was £1.25 billion on revenues of £5 billion, while the overall BT Group reported an operating profit of £3.7 billion (£2.5 billion after tax) on revenues of £17.8 billion.

“We believe that Britain should be leading the world in digital innovation. Yet instead we have a monopoly company clinging to outdated copper technology with no proper long-term plan for the future,” continues the report. “We need to start converting to a fully fibre network so we are not left behind the other nations who are rushing to embrace digital advancement. However, we will only achieve this by taking action to open up the sector.

“Given all the delays and missed deadlines, we believe that only a formal separation of BT from Openreach, combined with fresh competition and a concerted ambition to deliver will now create the broadband service that our constituents and businesses so rightly demand.”

Superfast untruths

BT CEO Gavin Patterson has described the report as “misguided” and claimed that “over 90 per cent of the UK can get superfast broadband today”.

However, Paterson’s claim is contradicted by Openreach, the company responsible for connecting BT customers to fibre networks. According to the most recent statistics published on Btplc.com, over 75 per cent of UK premises have access to fibre broadband, not “over 90 per cent”.

And then there is the question of what constitutes “superfast”. According to 2015 global rankings from Akamai, the UK’s average broadband speed is just 13Mbps. Although 87 per cent of UK broadband customers have connection speeds in excess of 4Mbps – hardly a state-of-the-art service – only 46 per cent have speeds of over 10Mbps, and just 28 per cent have speeds of over 15Mbps (which again, is hardly a high-speed service by modern standards).

So the implication is that the national average is being skewed by a small minority of people who have access to much higher connection speeds than others; most are probably London-based enterprises that have paid for private installations.

The UK lags behind South Korea (where the average national connection speed is in excess of 20.5Mbps); Sweden (17.4); Norway (16.4); Switzerland (16.2); Hong Kong (15.8); Netherlands (15.6); Japan (15); Finland (14.8); Czech Republic (14.5); Denmark (14); and Romania (13.1).

However, the average UK connection speed is just above that of the US, according to Akamai – which is hardly surprising, given the vast landmass and rural heartlands of North America. In the UK, few people genuinely live long distances from a major town or city.

Then there is the type of fibre connection in play. In many cases, BT services are Fibre to the Cabinet (FTTC), with ageing copper connections to premises, rather than Fibre to the Premises (FTTP) connections, which are up to four times faster – up to 330Mbps against up to 80Mbps for FTTC (according to Openreach statistics).

So, with a theoretical fibre broadband top speed of 330Mbps in the UK, the average UK connection speed is actually 25 times slower than that, while the majority of UK customers experience speeds that are over 50 times slower than the fastest FTTP connection – hardly “superfast”, Mr Paterson.

Meanwhile, any copper-based users who are situated a long way from the exchange will get a very poor connection indeed, particularly if they are based in one of the UK’s many ageing buildings. And as many UK residents know, there is a postcode lottery for cable or satellite alternatives.

While it may be true that between 75 and 90 per cent of the UK population has theoretical access to broadband services of some kind, widespread anecdotal evidence from across the country suggests that BT’s service is often patchy and unreliable, with speeds nowhere near those that customers pay for*. Rural connectivity is especially poor, and ‘notspots’ abound nationwide.

The BIG report itself reveals that while broadband connectivity may be good in London, Manchester, and one or two other centres, it is often poor elsewhere – even in the South East and in a number of major cities*, such as Bristol.

And there is another factor that prevents faster improvements to the UK’s ageing infrastructure: it is simply not in either BT’s or Openreach’s commercial interests to upgrade more parts of the network when they can charge some customers – especially enterprises – a premium rate for private installations.

In short, it is yet another example of the fatal tension between short-term shareholder value and long-term benefit to the taxpayer, which affects so much of our national life. Stakeholders in large, lazy, arrogant private businesses who believe they have the market sewn up prefer to get rich quick rather than invest in building something that would benefit everyone in the long term (while issuing deeply misleading statements about their progress).

Why are we waiting?

There are other problems for UK plc, too. According to 2015 Openreach figures, businesses face an average wait of 33.49 working days (nearly seven weeks) for broadband installations, or 69.95 working days (14 weeks) if the service requires a new build. Those are hardly ‘utility’ service levels. But that is hardly surprising: someone in the chairman’s office of BT once remarked to a colleague of UCInsight’s, “Broadband is not a utility, and it never will be.”

The apparent disconnect between BT, Openreach, customer service staff, and repair and maintenance teams is another grumble for many users, at a time when BT seems more focused on becoming a content player than the infrastructure provider that its customers actually want.

The conclusions are stark: whether separately or together, BT and Openreach must set aside their quest to be media moguls and focus on providing what the UK needs: a genuine superfast network for the 21st Century – network coverage, not multimillion-pound sports coverage. And rather than pour even more millions of pounds into CRM technologies that seem to be making BT ever more remote, aggressive, and sales focused, the company should try something truly radical: treating customers with care and respect.

*: UCInsight’s correspondent writes from one of the UK’s prime digital hubs, Brighton – home to countless apps, mobile, web, SEO, and games companies – where at an office in the centre of the city the BT broadband speeds are never more than 3.5 – 5Mbps at best, against a billed-for speed of 20Mbps. The service is patchy and frequently falls over, sometimes running as slowly as a dialup connection. Infinity is not available – despite endless sales pitches to this address saying it is – in what is one of Brighton’s (and the UK’s) major retail and business locations.

About Author

Chris Middleton

Chris Middleton is a widely respected business and technology journalist, author, and magazine editor. In recent years he has been Editor of Computing (where he remains Consulting Editor); co-founder and Managing Editor of Professional Outsourcing – a magazine he developed from scratch and grew to be the leading magazine in its field; Editor of CBR in its most successful year; and co-founder and launch Editor of Sourcingfocus.com. Today, he is co-Director of EastwoodMiddleton Publishing, and founder, designer, and Editor in Chief of Strategist magazine (UK), the boardroom magazine that provides strategic insight for business leaders, and of its mobile-first digital edition at www.iamtheStrategist.com. He is also co-founding Editor of Child Internet Safety magazine, and a contributing Editor of Diginomica.com. Over the years Chris has also written for, among many others, The Guardian, The Times, the BBC, and Computer Weekly. He is the author of several successful books on digital media, and a commissioning editor of more than 50 books.