The chief executive of TalkTalk has warned that competition in the UK broadband market is under threat unless BT locks in long-term deals with rival telecoms companies to use the ultrafast fibre network it is building.
BT cut its dividend in May to fund a £12bn expansion its new network, which aims to reach 20m homes by the end of the decade.
At that stage BT was confident its network arm, Openreach, could sign up other broadband companies to shift millions of consumers off old copper lines on to a modern fibre optic lines that run to their properties.
But two months later BT warned that discounted deals with companies such as TalkTalk and Sky could be in breach of UK competition rules — TalkTalk had been close to striking a deal.
Tristia Harrison, chief executive at TalkTalk, told the Financial Times that such contracts were key to ensuring competition to BT remained vibrant in the broadband market.
If BT’s rivals cannot get on board with a long-term deal, it could undermine the government’s “levelling up” strategy. “The next three to six months are critical,” she said of the development of the full fibre market. “The clock is against us.”
Both Openreach and TalkTalk have said consumer demand for broadband services had accelerated during the pandemic and subsequent lockdown.
Ms Harrison said that BT’s argument on competition rules were a “red herring” and striking such deals was logical, and pointed to an accord struck between Openreach and CityFibre, a Goldman Sachs-backed smaller rival.
The intervention by TalkTalk is the first sign that the British telecoms industry may be returning to its former fractious nature when BT’s rivals Sky, TalkTalk and Vodafone, which use Openreach’s network, openly criticised the company’s behaviour.
Ofcom threatened to break up BT but opted to instead to strengthen the independence of Openreach, which serves rivals, from its parent BT, which competes for consumers.
Ms Harrison said that a failure to sign the wholesale contracts would be the “first real test” of the legal separation of BT and Openreach, despite the significant progress that has been made over the past three years.
Openreach said BT’s consumer arm was not allowed any preferential treatment.
“We have a legal obligation to treat all of our customers equally and we take that very seriously. That means our full fibre products will always be available to every [provider] in the UK under the same prices terms and conditions,” he said.
BT’s huge investment was underpinned by incoming rules from next year that give the former incumbent more flexibility over the prices it charges and the speed it can switch off older copper lines, which would force customers to upgrade.
Ms Harrison said that TalkTalk needed certainty before it would support that move and if it could not sign a wholesale deal it would review its options “very seriously”.