BT warns Openreach sell-off could harm broadband rollout

BT has warned it could scale back its roll out of superfast broadband if Ofcom compels it to sell off its network arm, Openreach.

The telco giant's CEO, Gavin Patterson, told the Financial Times that without Openreach, its department in charge of broadband, it would be less inclined to expand its coverage.

He said: "It would be difficult to convince the board of BT to invest."

Industry watchdog Ofcom is considering BT's proposed 12.5 billion takeover of mobile operator EE, as BT pushes to become a quad-play provider of broadband, pay-TV, landline and mobile services.

But it's invited rivals like Sky and Talk Talk to comment on the acquisition, as it decides whether or not it's anti-competitive, and they are likely to ask for greater access to BT's UK-wide network, and possibly a break-up of BT's assets.

At the same time, Ofcom is performing an "overarching review" of Britain's communications landscape, focusing on competition, investment and innovation.

The regulator wrote in a report about the review: "In light of market developments and outcomes, might it be necessary to vary the existing model of functional separation for Openreach?"

BT is currently expanding superfast broadband coverage to 95 per cent of the population by 2017 under the government's Broadband Delivery UK project.

The rural rollout has come under scrutiny from MPs over an alleged lack of competition, after Fujitsu dropped out of the running to leave BT to sign all 26 contracts up to June 2013.

Guest editor's view

TechUK CEO Julian David says: Private investment and a competitive market have been crucial to developing the level of connectivity the UK benefits from today. However, there is still work to be done to improve access and speeds in rural and urban areas. Industry needs a supportive regulatory environment if we are to deliver the ultrafast speeds the Conservatives committed to in the budget in March. A review is timely but it must focus on what is practical and will work to get the highest level of investment in digital infrastructure.