Millions suffer 'dire' internet speeds, report by MPs warns

Millions of broadband customers and businesses suffer "dire" connection speeds despite BT receiving £1.7 billion in taxpayers' money to improve services, according to a report by MPs.

They are calling for the telecoms giant to be split from its Openreach subsidiary to end its "natural monopoly" over the nation's broadband infrastructure, amid claims 5.7 million customers, especially in rural locations, have internet speeds so low they break regulations.

BT said it took any criticism seriously, but described the report as "misleading and ill-judged", claiming the proposal to break apart the business was "wrong-headed", while a Government spokesman labelled the figures "entirely misleading".

The cross-party report carries the signatures of 121 MPs, including former Tory cabinet minister Grant Shapps, Lib Dem former Scottish Secretary Alistair Carmichael, Labour MP Helen Goodman and Ukip's Douglas Carswell.

It concluded: "Unless BT and Openreach are formally separated to become two entirely independent companies little will change. They will continue to paper over gaping cracks.

"Whilst rural SMEs (small and medium-sized enterprises) and consumers are left with dire speeds, or even no service at all, Openreach makes vast profits and finds little reason to invest in the network, install new lines or even fix faults in a properly timely manner."

The report called for a "bold and comprehensive solution", adding: "Openreach has so far received £1.7 billion in taxpayer subsidies to connect harder to reach areas of the UK to superfast services, but has repeatedly failed to deliver."

It is the first report by the British Infrastructure Group (BIG) set up by Mr Shapps.

He wrote: "With the UK economy now so reliant on its internet infrastructure, this BIG report contends that our future is being held back by systemic underinvestment stemming from the 'natural monopoly' of BT and Openreach."

The company's alleged failure to improve ageing digital infrastructure that still largely relies on outdated copper cables was blamed for "stifling" the economy at a cost of billions each year.

Using data from the Office for National Statistics, researchers found around 5.7 million broadband customers had internet connections that do not reach Ofcom's "acceptable" minimum speed of 10Mbit/s, around 3.5 million of which live in rural areas.

A review by the regulator had found 42% of SMEs reported experiencing problems with their internet connectivity and 29% suffered from poor service reliability, costing the economy £11bn a year, the BIG said.

The group also raised concern that the recently announced merger of BT and mobile provider EE meant the group will eventually have a 40% share of the retail telecoms market and a 70% share of the wholesale market.

BT said: "The idea that there would be more broadband investment if BT's Openreach infrastructure division became independent is wrong-headed.

"As a smaller, weaker, standalone company, it would struggle to invest as much as it does currently."

The company said the UK was "repeatedly" ranked the best for broadband speeds in the EU and claimed 90% of "UK premises" can access fibre optic connections.

There were plans to increase that by 5%, but it cited "all manner of physical and geographic challenges" for any delays.

A spokesman for the Department of Culture, Media and Sport said its superfast broadband programme is "on track and under budget".