John Petter, the CEO of BT’s consumer business, has brushed aside calls for BT to be broken up by the UK government so that its Openreach unit, which operates the largest national broadband internet network, can be forced to compete on its own.
Instead he called for Ofcom, the UK TV regulator, to break up Sky TV instead.
He was joking, but he made an interesting case. Sky, which has 21 million customers across its five countries, takes 70% of UK pay TV market revenues and charges around four times for its subscriptions as they average TV bill in France, Petter said. Sky recently paid about £4 billion for rights to broadcast most English Premier League matches, and Petter claimed Sky would pass on one third of the cost of that to its customers in the form of higher prices.
So if you’re looking for a company that dominates its market and has the power to extract “monopoly prices” for its services, “Go west!” Petter told the Enders Analysis conference in London, “to the offices of Sky!” which he said should be separated into its “wholesale” and “retail” divisions.
Sky group CEO Jeremy Darroch didn’t respond when he presented to the conference shortly after Petter.
BT of course bought a slice of the Premier League’s TV rights for just under £1 billion, pushing up the price of those rights for Sky, too. BT will broadcast those matches free to its broadband customers who take up its TV packages but at some point in the future will charge extra fees for viewers who want to see Champions League matches.
Petter was also angry about a recent report in the Financial Times that suggested BT be broken up, and its Openreach broadband unit be hived off, which stated:
Some in the industry have urged the watchdog to take a closer look at BT, following its decision to acquire EE, the UK’s largest mobile operator. Companies such as TalkTalk and Sky are calling again for the break-up of the former national operator, which owns the country’s largest broadband network.
With the planned acquisition of EE, BT will have about a third of the entire UK consumer telecoms market and over 70 per cent of the wholesale market, according to analysts at Macquarie. TalkTalk said it was “crucial that we now seize this opportunity to structurally separate” Openreach, a unit of BT that operates the national broadband network.”
This tweet summarises his reaction: