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BT’s Jansen calls for new deal to boost broadband
Britain risks “snatching defeat from the jaws of victory” by failing to invest billions in a nationwide broadband upgrade
The chief executive of BT has warned the Prime Minister that Britain risks “snatching defeat from the jaws of victory” by failing to unleash billions of pounds of private investment in a nationwide broadband upgrade.
Philip Jansen this weekend appealed to Boris Johnson and Ofcom, the telecoms watchdog, to revamp incoming regulations “before it is too late” and avoid putting the brakes on an urgently needed overhaul of internet infrastructure.
He said: “I worry that at this critical moment for the UK – post-Covid and with Brexit – we are going to not push hard enough or be brave enough and will end up with a situation which no one is happy with.”
BT’s monopoly infrastructure arm, Openreach, which also underpins broadband from Sky, TalkTalk and Vodafone, is in talks with Ofcom about how new “full fibre” services will be priced before a final decision in spring.
The regulator’s chief executive, Dame Melanie Dawes, sent BT shares soaring last week by signalling wholesale prices for faster and more reliable full fibre will not be capped until 2031 at the earliest. However, Mr Jansen insisted the plans do not go far enough and will slow the rollout.
He said: “BT is not going to be making any return on this until year 18 or 19. I need certainty for 20 years if I am going to build like fury, which is what I am always saying I want to do. The problem is if I only have 10 years of certainty I have an incentive to build slower so that when the time comes to negotiate the next price settlement it is not one-sided.”
The former Worldpay boss called on Mr Johnson to intervene to salvage what remains of his Tory leadership campaign promise that every home and business would have access to full fibre by 2025.
The pledge was watered down at the general election to “gigabit” broadband, which is already feasible via minor technical upgrades for more than half the country, mostly in big cities, via Virgin Media’s cable network.
Then, in last month’s spending review, the pledge was eroded further with a 76pc cut to a £5bn subsidy meant to ensure rural Britain does not miss out.
Now the Government is committed to an upgrade by 2025 for only 85pc of the country. The retreat from what was a flagship policy has caused dismay in the telecoms industry.
Mr Jansen, 53, had himself held talks with Mr Johnson about how to deliver the upgrade. He declined to comment on the Prime Minister’s position but said it was essential now for Ofcom to “look further into the future”.
TalkTalk has, meanwhile, complained that the regulator’s plans even as they stand already hand an unjustified boost to BT.
Mr Jansen argued that Ofcom should cap the returns BT can make from full fibre, while giving longer-term certainty that prices will not be cut. He said: “The board and I would be happy to agree to cap our returns, in return for more certainty.”
Uncertainty about the costs and returns of full fibre have weighed on BT’s shares, combining with Covid and its pension deficit to drag them close to their lowest level in a decade.
Mr Jansen is seeking to rebuild by demonstrating to the City that by investing in new infrastructure – which will replace aged copper telephone lines – BT can deliver steady, utility-style returns.
Private equity firms and sovereign wealth funds have targeted other telecoms infrastructure assets and are circling BT in the hope of taking a stake in Openreach next year once the regulatory regime is settled.
Last week, Dame Melanie said: “We recognise there must be a compelling investment case.”
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