BT is warned by MPs to put house in order or face a forced break-up
BT must "put its house in order" or face a break-up after failing to invest in its Openreach network arm, potentially to the tune of hundreds of millions of pounds a year, MPs have warned.
A scathing report from the Culture, Media and Sport Select Committee claimed the telecoms giant has "significantly under-invested" in Openreach, which is responsible for rolling out super-fast broadband across the UK.
It accused BT of making strategic decisions that put the group's interests ahead of customers and its Openreach business.
MPs warned if it does not ramp up investment in Openreach and address poor service, Ofcom should force BT to split off the division.
Ofcom stopped short of forcing a full separation of BT earlier this year, but said the group must give the division more independence to avoid a break-up in the future.
BT - which now owns mobile phone group EE - has since pledged to spend £6bn over the next three years and overhaul customer service to see off the threat of a forced split. MPs said on publishing their extensive report that while they supported Ofcom's proposals, BT should be broken up if it fails to "offer the reforms and investment assurances necessary to satisfy our concerns".
The report found BT's under-investment could potentially run to hundreds of millions of pounds each year.
The report said BT was "exploiting the position of vertical integration to make strategic decisions that favour the group's priorities and interests, at the expense of its access infrastructure business".
It added that BT "appears to be deliberately investing in higher-risk, higher-return assets such as media properties, and not investing in profitable lower-risk infrastructure and services through Openreach".
Ofcom likewise came under fire, with MPs saying it was "slow to introduce minimum service standards with financial penalties for Openreach, some nine years after its creation".
MPs also said tougher penalties for poor service would encourage BT to invest more in Openreach.
Rival companies such as Sky and Vodafone have called for a split between BT and Openreach.
They pay to use the network and have previously complained over poor service and urged the group to replace its ageing network of copper wire.
BT said it was "disappointed to be criticised for having invested more than £1bn a year in infrastructure when the UK was emerging from recession and rival companies invested little".
Ofcom welcomed the MPs' report and said it agrees that Openreach's performance "has not been good enough".