Sky’s initial submission to Ofcom’s Strategic Review of Digital Communications is available here.
Sky is calling on industry regulator Ofcom to instigate a full market investigation to examine problems affecting consumers in the UK’s broadband marketplace. The company believes that issues covering both competition and quality of service are sufficient for Ofcom to ask the Competition and Markets Authority (CMA) to conduct an inquiry. The call is made in a formal submission to Ofcom that is published by Sky today.
In the submission, Sky sets out details of the standard of service delivered to consumers by BT’s Openreach division, which operates and maintains the UK’s national telecoms network. The evidence highlights how a history of under-investment has led to range of service quality problems including an excessive number of network faults, failure to meet targets for repairing faults, long waits to have new lines installed, appointments that are missed and jobs that are not completed.
Key findings from Sky’s submission include:
- Approximately 90% of new line installations, which require an Openreach engineer to attend, take 10 calendar days or longer. Almost one in ten installations takes longer than 30 days.1
- Openreach changes the agreed installation date for Sky customers on average around 12,500 times a month.2
- Openreach misses over 5003 appointments each month to install new lines for Sky customers and fails to complete a further 4,000 jobs per month.4
- Fault rates across Openreach’s network increased by 50% between 2009 and 2012, the last year for which reliable data is publicly available.
- Openreach’s performance in fixing faults is consistently below the targets set out in agreements with service providers.
Sky represents around one third of broadband customers relying on access to the network operated by Openreach. If its experience is typical across the market as a whole, the scale of the overall impact on customers is therefore greater in scale by around three times. For example, if the rate of missed Openreach appointments was repeated across the market, and all affected customers lost a day of work, the loss to the UK economy each year would be 18,000 days of work. This is equivalent to 70 years of full-time work.
The scale of these problems is directly related to the level of investment in the ‘last-mile’ or ‘access’ copper infrastructure that connects individual homes to BT’s network. Alongside the submission, research by independent consultancy Frontier Economics shows years of declining investment in maintaining the copper network. After accounting for the cost of rolling out fibre broadband, Frontier estimates that capital expenditure on other Openreach activities (including maintaining the copper network) fell by around a third over the last decade. Such cuts have the effect of reducing service quality and overall network reliability.
In addition to problems of quality of service, Sky highlights concerns about future competition in the market for broadband services in the UK. Over the last decade regulation has supported effective competition and new entrants have challenged BT, resulting in increased choice, lower prices and innovation for customers. However, superfast broadband services are regulated differently and these gains may be at risk from a reduction in competition as the UK transitions to services based on the new technology.
Mai Fyfield, Sky’s Chief Strategy Officer, said: “We are drawing attention to the problems in broadband because they are important to the economy as a whole. They affect competition between providers and have a direct impact on consumers and small businesses, resulting in inconvenience, dissatisfaction and loss of productivity. The UK needs to get the basics right in broadband as well as develop the networks and services of the future.”
“We believe that Ofcom should move quickly to ask the Competition and Markets Authority (CMA) to undertake a full competition inquiry. A reference to the CMA would allow these vital issues to be examined with increased speed and thoroughness by a body with the powers to take whatever action should be deemed necessary. Given the rapid changes taking place in the sector, we believe this should happen as soon as possible.”
Sky’s initial submission to Ofcom’s Strategic Review of Digital Communications is available here
1 12 months to April 2015
2 12 months to July 2015
3 12 months to February 2015
4 May 2014 to February 2015
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Sky is Europe's leading entertainment company. The group serves 21 million customers across five countries: Italy, Germany, Austria, the UK and Ireland. We offer the best and broadest range of content, deliver market-leading customer service and use innovative new technology to give customers a better TV experience, whenever and wherever they choose.
Sky has annual revenues of over £11 billion and is Europe's leading investor in television content with a combined programming budget of over £4.6 billion. The company employs 31,000 people and is listed on the London Stock Exchange (SKY).