A report into BT’s supposedly inflated return on broadband investment has been labelled by the telecom company as ‘ludicrous.’
At the same time, Vodafone had asked the UK government to tighten the regulations surrounding Openreach.
The Register has seen a confidential November 2014 report from Frontier Economics, in which it says that the historic return on investment has not been between 8-11 per cent.
The actual figures over the last eight years have been much higher, peaking at more than 18 per cent.
BT basically said the report is as far away from sanity as it could possibly be.
“The report is ludicrous and it was ludicrous two years ago when it first surfaced,” The Register quotes BT, adding that the report surfaced some six months ago.
“BT is allowed by Ofcom to make a return above the cost of capital, so this is a highly ill-informed report designed purely to attract headlines,” the one-time national monopoly’s spokeswoman said.
However, the problem is not within a competitive open market – the problem lies (and quite literally, too!) in the infrastructure – copper and fibre placed in the ground – where BT is the only game in town.
“Ofcom’s approach has been successful and the UK has one of the most competitive telecoms markets in the world, [and] as a result [we have] low prices and high levels of investment,” the BT representative responded.
Vodafone says that BT should have made £11.3 billion in the past eight years, but had instead earned £16.7 billion
The excess money comes from the profits of corporate customers, Vodafone, Sky and other ISPs and telecoms which have to buy services from BT, Vodafone claims.
The telecom company asks not only for tighter regulations, but also direct access to dark fibre, with the ability to install Vodafone kit onto it and not to have to rely upon Openreach.