BT Openreach in Talks for new Ultrafast Broadband

BT’s Openreach subsidiary is in “early but serious” talks with Vodafone about a joint investment in a new ultrafast fibre-optic broadband network, according to a report by the Daily Telegraph.

The discussions centre around plans to build large-scale new infrastructure to replace aging copper phone lines, which can’t deliver broadband at speeds and capacity of more modern options. The Daily Telegraph said that the two companies are interested, but that the proposed joint investment cost is uncertain, but could run into the billions of pounds over time.

For those which aren’t aware of Openreach, they’re a company within the BT family which own the pipes and telephone cables that connect UK homes and businesses to broadband and telephone services. That means that whether you get your broadband from BT, Sky, TalkTalk, Plusnet or any other non-Virgin network, Openreach are in charge of connecting you to the network.

Under new rules set by Ofcom, BT must sell access to its network on equal terms to all retailers, including its own consumer arm. That could add a wrinkle to any potential joint investment, with Vodafone having to seek their investment returned in other ways. Any deal could potentially result in higher overall wholesale costs for resellers like Sky, with Vodafone taking a cut from those profits.

The Daily Telegraph report that Vodafone are understood to be demanding a period of exclusivity with the infrastructure, to allow it to build their position in the market.

BT have seen a significant win recently with shares rising following the Competition Appeals Tribunal’s ruling that Ofcom’s demand for a ‘dark fibre’ network was unlawful.

Ofcom had ordered BY to introduce a ‘dark fibre’ product that would allow rivals to install their own equipment to send signals along fibre optic cables, rather than paying to use the ones owned and operated by Openreach. The regulatory body also cracked down on the services offered by BT’s Openreach, which is being legally separated from BT.

Openreach has been the subject of much controversy over the decades as the rise of broadband usage and the development of major broadband competitors like Sky have caused problems for the company. Originally a profit-making enterprise for BT, it’s been increasingly regulated to the point we’ve now reached, but broadband companies remain unhappy at how slow, expensive and inefficient the company is.

Meanwhile, BT themselves are struggling under the weight of consumer complaints that they’re receiving. Yet again, Ofcom have named them the worst broadband supplier in terms of customer complaints per hundred thousand, with 34 making complaints about the company over the BT contact details.

In second was TalkTalk, who are still recovering from the devastating hack which revealed thousands of financial details of their customers. That’s followed by Plusnet and EE, with 25 and 24 complaints per 100,000, respectiveof their customers. That’s followed by Plusnet and EE, with 25 and 24 complaints per 100,000, respectively.

At the bottom of the list with the fewest complaints are Virgin Media and Sky, with 13 and 8 complaints. Virgin are an interesting case study here because they don’t rely on Openreach for their connections.