Tempers fray in British broadband battle

Vodafone boss launches bitter attack on BT and Deutsche Telekom

People walk past a shopfront on in London advertising Black Friday discounts last year. Originating in the US, Black Friday is becoming an increasingly popular shopping day in the UK. (Photograph:  Rob Stothard/Getty Images)

People walk past a shopfront on in London advertising Black Friday discounts last year. Originating in the US, Black Friday is becoming an increasingly popular shopping day in the UK. (Photograph: Rob Stothard/Getty Images)

 

Tempers are getting increasingly frayed in the costly battle to deliver fast, reliable broadband to British households. Tensions have been simmering for some time, particularly since BT’s bold £12.5 billion bid to take over Britain’s biggest mobile network operator, EE, a deal that was given provisional clearance by Britain’s competition authorities a fortnight ago.

The gloves came off yesterday as Vodafone boss Vittorio Colao launched a bitter attack on the former state-owned BT and Deutsche Telekom, which jointly owns EE along with France’s Orange. BT and Deutsche – which will become BT’s largest single shareholder with a 12 per cent stake once the EE deal is completed – were attempting to “undo 30 years of progress in telecoms in Europe” by recreating their former monopolies, the Vodafone boss claimed.

“Your main supplier is actually a competitor and does not play ball,” Colao said, as he called on EU competition commissioner Margrethe Vestager to investigate the former state-owned telecoms giants.

Vodafone is the fourth-largest broadband provider in Europe but is reliant on BT’s cable network – run by BT’s infrastructure business Openreach – to deliver its broadband service to customers. Colao complained that in the UK, Openreach delivers only half of what Vodafone asks for on time.

One of the problems is BT’s use of its old copper networks, rather than modern, fast-fibre connections. The Italian-born Colao gave a graphic personal example of what he says Vodafone is up against.

Colao told City AM that in his Milan flat he had three fibre options available to him. His London flat, however, which is just as centrally located, has just one slow copper network – “and my son kills internet speeds every time he watches Netflix”. Colao repeated his demand that Openreach should be hived off into a separate company or that it should at least have controls on price and service imposed in order to address the competition issues.

In response to the Vodafone boss, BT maintained that the UK is one of the most competitive telecoms markets in the world and that Colao’s accusations were “highly misleading.”

The industry regulator, Ofcom, is currently reviewing whether Openreach should be hived off. In an attempt to head off criticism, BT’s boss Gavin Patterson last month promised to speed up the group’s rollout of faster fibre connections. He also pledged that every home in Britain would have access to a minimum standard of internet access, sufficient to stream high-definition video.

However, he said, it would require “a collaborative effort, across industry and government”.

Prime minister David Cameron is certainly taking a keen interest – on Monday he unveiled plans to give people a legal right to request a fast broadband connection, something he plans to put in place by the end of the current parliament. This would put broadband on a par with services such as water and electricity.

Access to the internet was, he said, not a luxury but “absolutely fundamental to life in 21st-century Britain”.

Black Friday: It’s not quite as bad as cancelling Christmas, but almost – American-owned supermarkets group Asda has declared that it will not take part in the Black Friday sales frenzy later this month.

As other retailers gear up for a spending orgy on November 27th, Asda has decided instead to spread its price cuts out over several weeks, offering savings of some £26 million in the run-up to Christmas. Explaining the decision, Asda chief executive Andy Clarke said customers did not want to be “held hostage” to a day or two of sales.

The frenzied scenes at some Asda stores last year might also have something to do with the group’s decision, with fights breaking out at some stores as customers grappled with each other for hugely discounted electrical goods.

Last year British shoppers splashed out £810 million on Black Friday and it’s expected to be even bigger this year. Industry experts predict the total will break through £1 billion, equivalent to £16 for everyone in the UK. If expectations are met, it will be the first time British shoppers have ever spent £1 billion in a single day.

The irony for Asda, as it watches from the sidelines, is that last year it was proudly boasting that it was responsible for introducing the American shopping extravaganza to Britain in the first place. Asda stores are likely to be eerily quiet on Friday 27th, but it’s got a lot to answer for. Fiona Walsh is business editor of theguardian.com

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