Virgin Media: BT And Openreach Should Not Be Split Up

Virgin Media is opposed to any move by Ofcom to separate Openreach from rival BT but says the government should stop subsiding the former state monopoly’s rollout of superfast broadband through vehicles like Broadband Delivery UK (BDUK).

Sky, TalkTalk and Vodafone are among those who have told the regulator’s once-in-a-decade review of the UK communications market that Openreach should be made an independent company, arguing the current structure discourages investment and hands BT an unfair advantage.

But speaking at Broadband World Forum event in London today, Virgin Media CEO Tom Mockridge said Virgin Media’s £3 billion expansion of its cable network was a sign that the market is working and wants Ofcom to focus on creating a regulatory environment that promotes investment.

BT Openreach view

“A lot of the submissions have been an attack on BT and say it should be forced to sell off its Openreach division,” he said. “I would like to say that’s not something we agree with as an infrastructure investor.

“If [Virgin Media’s parent company] Liberty Global is investing billions of pounds in this network, it’s not a great message to any investor if the state was to take away that network. BT was privatised 30 years ago with that network and the decisions were made then.

“We would say this is not reasonable and we would say economic policy and regulation should be set to [promote investment].”

Network upgrades

Virgin Media’s Project Lightning will expand its cable infrastructure to a further four million properties over the next five years, bringing its total footprint to 17 million properties.

Mockridge said the firm’s previous owners were “capital restrained” and so expansion had remained stagnant for the past decade, but Liberty Global’s shareholders were prepared to invest. He said if the market was willing to provide the funds for infrastructure, the government should stop handing out money to BT and others.

“Subsidies for broadband in the UK still go to BT because we don’t take them,” he said. “Let the market do the work and maybe have less state involvement.”

But despite his support for the status quo, Mockridge appeared to suggest Openreach was stifling third party providers like Sky and TalkTalk. He said Virgin’s network was much more capable than BT’s because it is far newer and incremental upgrades could eventually lead to effective fibre to the premise (FTTP) abilities, whereas those on Openreach were limited to whatever BT decided.
“We are the only real competitor to BT in this country as a full operator with comprehensive range of services,” he said. “BT is a great company but we are rivals.”

Regulation demands

Virgin has more issues with BT’s proposed takeover of EE, specifically the joint-spectrum holdings a merged entity would have, but it feels the main issue for Ofcom is to ensure the market is open to new entrants.

This includes regulation that ensures competition and ensures companies like Virgin Media have the same access to land and powers that gas water and electricity providers have become accustomed to. BT, it says, is not in such dire need of these measures because its network dates back centuries.

Another area Virgin has its sights set is Premier League Football, to which BT and Sky have the live television rights for selected matches as part of a multi-billion pound deal. Virgin says the Premier League artificially inflates the rights by only making a small selection of matches available for broadcast as part of packages.

“Here’s an example of where a competition regulator should step in,” argued Mockridge. “In this country, the Premier League chooses to position itself as a force for social good like the Red Cross, yet they choose to sell their rights in an uncompetitive way by withholding supply.”

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