BT resorts to broadband blackmail

Boss claims villages won’t get super fast cables if the company is split up

BT has been accused of holding the digital future of Britain ‘to ransom’ by threatening not to invest in broadband if it is forced to split off its Openreach division.

Chief executive Gavin Patterson said the case for further investment only stacked up if Openreach was kept within the wider group.

BT has faced calls for a split following complaints from rivals Sky, TalkTalk and Vodafone over an alleged conflict of interest.

BT is responsible for Openreach – the UK’s network of broadband cables, which it charges competitors to use – as well as offering phone, internet and TV services.

Other broadband providers want this network to be independent, which they think will encourage investment and provide better service for customers.

BT has regularly been criticised for providing poor customer service, underinvesting and not doing enough for people in rural areas.

This has sparked a long-running review by telecoms regulator Ofcom into how best to drive change at BT.

But Patterson yesterday told the Broadband World Forum in London that while there was a ‘strong case’ to invest more in fibre-optic broadband networks, it would not add up if it was forced to spin off Openreach.

‘If you are only looking at the wholesale side – the Openreach side – then some of these investments are going to be challenging business cases to make,’ he said.

Dido Harding, chief executive of TalkTalk, said: ‘If BT believes it can hold critical national infrastructure to ransom in returnfor more empty promises, I think they are going to be sorely disappointed.

‘The truth is, however inconvenient for BT, it’s competition, not protecting the incumbent that’s going to drive the investment we need and that means separating Openreach.’

It came as Matt Hancock, the minister for the digital economy, said splitting up BT remained ‘on the table’.

He said: ‘My goal is clear: I am focused that we get (fast fibrebased connectivity). The route to that connectivity, both in terms of market structure, in terms of technology, in terms of the details along the way are of course very complex.’

Patterson said yesterday that BT’s ballooning pension deficit, which is predicted to have reached £14.2bn, would be further endangered by a ‘value destructive’ split.

BT has said this could further hurt investment in broadband.

Swiss bank UBS is worried about the deficit and has dropped its share price target for the company in response.

On Patterson’s comments, a spokesman for BT said: ‘We have made it clear on several occasions that separating Openreach from BT would result in less investment in UK networks. That’s because Openreach would be a smaller stand-alone company facing a much longer payback period on investment. Our comments were merely stating the obvious.’

BT shares fell 1.2pc, or 4.65p to 380p.