The UK Telecommunications industry under intense scrutiny in face of the BT and EE proposed convergence
Currently, BT’s wholesale branch Openreach has to provide wholesale products at the same service level and price to all competitors within the UK market. Whilst initially this appears unproblematic, BT is able to divert cash flow from the wholesale branch to the retail. This has been seen as funding BT’s purchasing of the Premier League TV rights for £960m and their potential £12.5bn acquisition of mobile network EE. Critics argue that this is at the expense of investment to the services and maintenance branch of Openreach, who has failed to reach repair targets for the last five years consecutively to the detriment of both existing customers and rivals with Baronness Harding, the chief executive of TalkTalk stating “I think the network has absolutely been under-invested. BT has as good as admitted they stopped doing basic maintenance during the fibre rollout.”
With the potential acquisition of EE however, BT faces increased scrutiny as it effectively becomes the biggest mobile provider overnight, gaining unprecedented control of the UK telecoms market. Calls from both mobile and landline competitors for a formal division of the BT group have sparked Ofcom to announce a once-in-a-decade communications review and the Competitions and Markets Authority to invite preliminary comments from all participants in the industry before fully investigating the BT/ EE and the Three /O2 consolidation deals.
