Digital Economy Bill

Debate between Lord Mitchell and Lord Fox

1st reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 31st January 2017 Lords Chamber

[Lord Fox]

My Lords, we associate ourselves with Amendment 20. I was under the impression that Ofcom was already looking at the process of legal separation, and if this is designed to strengthen its arm and make sure that it happens, then we approve. At Second Reading, I talked about the desirability of full structural separation. We know that the pension deficit has been used as a reason. When that calculation was made, was the full effect of the EE acquisition factored into the pension equation? Now that there have been substantial changes in the make-up of the corporate parent, can a different argument be made on pensions?

In the recesses of my mind I recall something being attempted in York along the lines of Amendment 21. It foundered because there was no separation in the BT/Openreach model and the route to market proved very difficult. Perhaps to be successful Amendment 21 needs Amendment 20, if not full structural separation.

[Lord Mitchell]

My Lords, I will address Amendment 20. The separation of Openreach from BT is fundamental to the success of Britain being a leader in the digital economy in the 21st century. It is unanswerable that BT has been given a monopoly in fixed broadband connectivity. It displays classic monopoly behaviour: it controls the distribution, sets the prices and dictates the terms to its competitors. It has no incentive to improve the quality of its service—just the minimum. I would not be so vehement on this issue if BT was supplying a brilliant service, or even if it gave us believable market facts. Its broadband coverage is awful and it successfully lobbies to persuade Ministers and others that it is meeting its targets; it is not. It is undeserving of any government support, particularly in its ownership of Openreach. Why should it be granted this monopolistic licence to print money? Alternative owners will have a real incentive to improve the service.

Fixed and mobile connectivity are converging. The route may be different, but they are joining up: data are data. BT is rapidly taking on all the attributes of the overall monopoly supplier: all internet connectivity. If you aggregate its stranglehold in broadband, add its ownership of EE in mobile and then factor in its future 42% ownership of the 5G spectrum, it is overwhelming. We have a massive monopoly in the making. Separating Openreach will certainly clip BT’s wings and improve broadband connectivity.