BT stays intact – but ‘may be split up after Brexit’

Britain could enjoy better broadband after leaving the EU because the regulator will have more powers to break up BT, Whitehall sources have told The Daily Telegraph. Ofcom, the regulator, yesterday rejected calls to force BT to sell off its broadband division and end its monopoly. The decision angered campaigners and MPs, who say BT has failed to invest in the network.

BRITAIN could enjoy better broadband coverage after leaving the EU because the regulator will have more powers to break up BT, Whitehall sources have told The Daily Telegraph.

Ofcom, the telecoms regulator, yesterday rejected calls to force the company to sell off its broadband division and end its monopoly.

The decision has infuriated MPs and campaigners, who have accused BT of leaving nearly 6 million people with sub-standard connections by failing to invest in the network. Whitehall sources said that Ofcom is reluctant to take stronger action because it is “very much aware” that it is the “junior partner” to the European Commission.

They raised concerns that BT would mount a legal challenge to Brussels in an attempt to stop Ofcom from selling off Openreach, its broadband division.

The former state telecoms monopolies in Germany, France, Spain and Italy – some of which remain partly stateowned – would be fiercely opposed to any break-up of their UK equivalent and the precedent it could set.

“Ninety per cent of Ofcom’s legal basis is controlled from Brussels,” the source said. “That will change when Britain leaves the European Union. It will give Ofcom more autonomy to act in the interests of British broadband.”

Ofcom yesterday recommended that BT Openreach should become a “distinct company” with its own board, with a majority of non-executive directors linked from outside BT.

Sharon White, Ofcom’s chief executive, insisted the regulator’s proposal amounts to “major reform”. “It will mean that we have faster, more reliable broadband,” she said.

However the proposals infuriated rival companies such as TalkTalk, Sky and Vodafone, which have warned that only a forced separation will guarantee that BT does not unfairly profit from its monopoly over the network.

Dido Harding, the chief executive of TalkTalk, told BBC Radio 4’s Today programme: “They [BT] have been absolutely brilliant at gaming the existing regulatory system. A new complicated regulatory system is just going to favour BT again. The proposals would allow BT to make the appointments on to the Openreach board. We won’t know how much profit they are making and whether they are investing it in improving their network or giving it to BT.”

Gavin Patterson, the chief executive of BT, described the proposals as a “sensible way forward” though they go further than BT’s offer of reform, under which Mr Patterson would still appoint BT Openreach’s chief executive. Ed Vaizey, the former culture minister, says BT appeared to have a “death wish” during his time in Government.

He backs the decision not to split the company in an article for The Daily Telegraph, but says: “BT finds itself under threat today mainly because of Openreach’s woeful customer service and poorly maintained infrastructure. They need to rapidly improve.”