Does BT need to separate from Openreach?

<p>MP Ed Vaizey says he is sceptical about having to split the business.</p>

BT's ownership of the Openreach network has come under attack from rivals like Sky, Vodafone and TalkTalk. Those firms say the network, which most internet providers use to deliver broadband services, should be run as a separate entity. They want the competition authority to investigate the issue.

Telecoms regulator Ofcom has said a split is one of the options being considered in its review of the telecoms market and that its recommendations will be published next year.

However minister for culture, communications and creative industries Ed Vaizey has said he is sceptical about the need to separate BT and Openreach.

"We would go with the trend of the review," he told the Financial Times, adding that "regulations have proved very effective" in the past.

He explained: "I think full separation would be an enormous undertaking, incredibly time consuming lots of potential to backfire. Ofcom is looking at it, I am a sceptic but we will have to see what Ofcom comes out with."

Mr Vaizey also said he was happy with the progress that BT has made with its subsidised roll-out of broadband across the UK. He noted that the company was on track to deliver superfast connections to 95 per cent of the country by 2017.

He also said he believes the UK's high level of ecommerce was thanks to the company's broadband network. "If broadband is so terrible, why are we the leading ecommerce nation in the world?" he asked.

Conflict of interest

Earlier this month, a group of telecom and media companies wrote to the Financial Times. In the letter, they said there were serious problems with the BT owning the national telecoms network. This included "a conflict of interest in the role of BT, poor quality of customer service and difficulties in enforcing the existing regulatory regime".

However, Mr Vaizey called the complaints in the letter "standard" and said those businesses needed to point out specific problems if they wanted to convince him.

"We have heard it many times in the last few years," he said.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.