CEO of Vodafone, Vittorio Colao, has added further fuel to the fire in the debate surrounding the future of BT and Openreach. Colao has suggested that Vodafone would be prepared to invest as a shareholder in any new company owning the largest telephone and broadband network in the UK, whether it be an independent Openreach or an entirely new company.
In the past few weeks, it has been reported that telecoms regulator Ofcom is considering a split between BT and its Openreach division, in its ten year strategic review of the broadband market. Openreach was created ten years ago, during Ofcom’s last strategic review, to provide access to BT’s telephone and broadband network to competing providers. This was supposed to be done on equal terms but competitors have complained about the service, claiming that Openreach prioritises BT’s own interests and customers.
Unsurprisingly, BT is opposed to the suggestion of a split which, it argues, will lead to a decade of litigation. Instead, BT proposes to invest billions over the next decade in its NGA2 (Next Generation Access) products including a new type of access technology called G Fast. G Fast is a new technology that offers up to gigabit speeds, whilst still using the existing copper wires. Trials for G Fast are due to begin in August this year, offering download speeds of up to 330Mbps. By 2025, BT suggests G Fast will offer download speeds of up to 500Mbps.
Vodafone is preparing to launch a total fixed line broadband service in the UK at the end of the summer and, like other providers, has to use Openreach to deliver its service to customer’s homes. Colao criticised BT for investing in expensive football broadcasting rather than the UK’s fibre network, stating that “It’s important that the UK gets more fibre and not more expensive football”.
Colao wants to see Ofcom recommend a break-up of BT and Openreach, but if that doesn’t happen then he would like access to fibre and ducts, as well as to content for everyone, at a reasonable price. He would also like the service from Openreach to become “world class”, rather than what he deems to be the “mediocre” service they currently provide.
Vodafone’s proposed investment in a national broadband company is conditional upon all service providers having equal access to the cables. Colao wants any new infrastructure to have fibre optic cables that run all the way to the doorstep of businesses and homes. This can allow speeds of up to 1000Mbps, as opposed to the current UK average of just 23Mbps.
Vodafone has collaborated with a rival mobile operator in Italy, offering to buy a stake in Metroweb – the partly state owned fibre optic company. Italy’s government has plans to invest heavily in high speed networks across the country and Vodafone advocates using Metroweb for shared national fibre infrastructure. Colao suggests that the same thing could happen in the UK if Openreach is forced to split from BT. This kind of project, he argues, can avoid resources being wasted because it will deter fibre companies from digging up roads multiple times to build competing networks in the same areas.
Colao advocates that broadband operators club together, through joint investment, to build a superfast broadband network for the UK. He proposes that it would be better to share the network and, instead, compete at the service level.
Vodafone is currently holding talks with Liberty Global that could result in Vodafone’s mobile network combined with Virgin Media’s cable network. A deal with Virgin Media would not prevent investment in superfast broadband because their cable network currently only covers about half of the UK. However, Liberty Global is investing £3 billion through ‘Project Lightening’, which should see cable coverage increase to two-thirds of the UK by 2020.
Last week, Vodafone reported its first advance in growth in the UK since 2012. Improvements were also seen across Europe and in some emerging markets. Colao puts this down to rapidly increasing demand for data which allows people to watch film and TV on mobile devices, revived growth in India, Africa and Turkey as well as a growing fixed line broadband service in Germany.