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Forced sale of Openreach division would put BT broadband investment at risk, says CEO

Infrastructure in danger

BT's plans to develop improved broadband infrastructure would be put at risk if Ofcom decided to force it to sell off its Openreach division, the company's chief executive has said.

Gavin Patterson said that it "would be difficult to convince the board of BT to invest" in broadband infrastructure improvements if the regulator took such action, according to the Financial Times. Openreach is the division of BT's business which controls BT's telecoms network.

Ofcom is currently conducting an "overarching review of the UK’s digital communications" in a move aimed at future-proofing investment and competition in the market. The review will look to ensure telecoms companies have the incentive to invest in their infrastructure and to innovate and flesh out future competition policy in the market, the regulator said when it launched the review earlier this year.

In a paper outlining the terms of reference for its review, Ofcom raised the prospect of further intervention in the telecoms market.

It said: "It is important to consider whether interventions are required to promote continuing competition, and if so where. Where are the future ‘enduring bottlenecks’, and how can regulation address them? In light of market developments and outcomes, might it be necessary to vary the existing model of functional separation for Openreach?"

In announcing BT Group's financial results for the year ended 31 March 2015, Patterson said BT currently has plans to invest in its broadband infrastructure.

"Our superfast broadband network now passes more than three-quarters of the UK and we’ve announced plans to upgrade to ultrafast," Patterson said in a statement. "This will be another multi-year investment by Openreach and is the right thing for both BT and the UK, providing even faster speeds in an already competitive market."

In its annual report (38-page / 859KB PDF), BT said that winning the rights to broadcast major sports matches on its TV channels had had a positive impact on viewing figures during the last year. BT Sport has the rights to show some Premier League football games, Aviva Premiership rugby and, from next season, will have the exclusive rights to broadcast UEFA Champions League and UEFA Europa League football in the UK.

"BT Sport average daily audience figures increased 15% year on year from the start of the football season in August to the end of March," it said.

BT said it had experienced "an unprecedented increase in the volume and intensity of cyber-attacks" last year, and taken steps to deflect as well as responds to such attacks.

"We recorded more top priority incidents in the last three months of 2014 than were experienced in the previous two years," BT said in its report. "The attacks were aimed not just at BT, but also at our customers, with the potential to disrupt others and cause collateral damage to BT services. Following a comprehensive review of the resilience and disaster recovery capability of our critical systems, databases and exchanges, we have invested in enhancing site resilience based on our target levels of acceptable risk."

"We have also invested significantly in geo-resilience (i.e. cross-site recovery) for our critical systems where this did not previously exist, and have already seen a return on this investment through seamless failover and continuity of service during planned and, occasionally, unplanned outages," it said.

Copyright © 2015, Out-Law.com

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