BT promises to ‘build like fury’ after Ofcom broadband price cap win

“For us, it is the green light we’ve been waiting for to get on and build like fury. Full fibre broadband will be the foundation of a strong BT for decades to come and a shot in the arm for the UK as we build back better from this pandemic,” declared BT boss Philip Jansen, in response to Ofcom promising to “create the conditions” for nationwide full fibre broadband. 

Translation: Ofcom’s price is right.

The welcome news for BT should help divert attention from the reports of boardroom bust-ups that have bedevilled the company of late. The result of those was an odd-looking statement insisting there had been “no misalignment between the board and executive management over the company’s strategy” while lamenting the impending departure of chairman Jan du Plessis. 

All in the past. Next up: Jansen standing in front of a fleet of Openreach vans shouting charge! Except that Openreach is supposed to be semi-detached from BT. So perhaps he’ll have to delegate the job to its CEO Clive Selley, whose promise to “ramp up” the work of laying fibre was slightly less expansive than that of his group CEO. 

When BT is as excited as Jansen and Selley seem to be it’s usually cause for a modicum of concern. Openreach still, remember, enjoys a near monopoly and monopolies don’t often play nice. 

Openreach’s semi-detached status was Ofcom’s solution when there were loud calls for BT to be broken up.

What both men’s statements make clear is that they got just about everything they wanted from their regulator.

The key paragraph in the latter’s statement explaining its decision over pricing was this: “Openreach’s fastest fibre services will continue to be free from pricing regulation.”

So the cap that some had been calling for will not be imposed. Openreach will be able to charge whatever it wants for super duper mega fast fibre speeds, or whatever they chose to call it. 

It isn’t quite like that, Ofcom says. BT will be restrained from price gouging by “the fact that people can choose the entry-level service as an alternative”. Its price will still be capped. But even there, the cap is being eased in BT’s favour. Bills are set to rise. 

Ofcom counters by arguing they’ve fallen by 20 per cent in recent years through being linked closely to BT’s costs. It says it’s making things easier to encourage BT to invest and shut down all those dated copper cables which the company used to try defending to anyone who’d listen. 

The watchdog insists BT hasn’t won on every issue. It has been asking us to lay off capping the premium super duper fast stuff for 20 years, Ofcom said, but we’ve only granted 10. 

It also argues that the charging structure it has come up with will assist rivals such as Virgin and CityFibre with their plans to set up or expand competing networks. Competition should further inhibit BT from squeezing its customers. There have been positive noises from the pair of them in response. 

What remains to be seen is how much of the country they’re willing to cover (the figure of 70 per cent has teen talked about) and how fast they’ll get there. 

At the end of his expansive statement, Jansen said: “Connecting the country has never been more vital.” He’s quite right about that.

BT, Openreach, structure it how you like but the phrase “foot dragging” has frequently been thrown in its direction. Ofcom, which has a very full docket right now, will need to watch this one like a hawk to ensure Jansen’s fury doesn’t lose its fire when it comes to delivering on his bold statements.