Ofcom won't split BT/Openreach, but it's split industry opinion

(Image Credit: iStockPhoto/EuToch)

Telecoms regulator Ofcom launched a review in March last year into whether BT and its Openreach network arm should be split-up due to rivals' claims the company has underinvested in the network – leading to poor speeds and reliability for those who pay to use it. 

Results of the investigation were posted today and Ofcom has ruled to allow BT to continue overseeing Openreach's operations for now; with the clause of tighter controls to ensure the network has sufficient investment to offer the best service to customers. The decision has split industry opinion, with many parties raising concerns it will offer little change. 

Alastair Masson, Client Partner, NTT Data UK says “Ofcom’s digital communications review is little more than a list of low impact measures to stimulate high-cost competition, rather than tackling the issue of Openreach and BT's influence on the wider market." 

“The industry is in a state of flux. BT has been urged to 'open up' its cable network and telegraph poles despite already doing this through its duct and pole sharing initiative; all while remaining tied to Openreach. Meanwhile, competitors wait in the wings for clarity on whether BT's market dominance will actually be restricted which is holding back potential investment and market competition as a result." 

One strategy announced by Ofcom is to force Openreach to open its telegraph poles and ducts; which Masson points out has been the case since 2009. The supposed difference is that Ofcom is pushing for a "digital map" to be created which allows rivals to see where improvements can be made and invest further in their own advanced networks.

The simplest and most effective way to fix the current broken market structure is for Openreach to be completely independent.

Despite still being a part of BT, Openreach will have to act more independently and be transparent with investments by making "its own decisions on budget, investment and strategy," instead of being governed by the financiers at BT. Ofcom hasn't thrown away the idea of splitting Openreach from BT, which could go to show that Ofcom is prepared for the new strategy not to work as desired. 

TalkTalk's Chief Executive, Dido Harding, says: "Ofcom has produced 100 pages of consultation with little concrete action behind it. The risk is that we end up with 10 more years of debate and delays, rather than facing into the problems and delivering improvements for frustrated customers now.” 

A spokesperson for Sky commented: "Ofcom's actions today are not the end of the debate, but a staging post towards delivering the network and service that Britain needs. We believe the simplest and most effective way to fix the current broken market structure is for Openreach to be completely independent. We are pleased to see that separation is still on the table." 

However, splitting Openreach from BT would not be without its own problems. Openreach as its own entity would be a fraction of the size of BT, and unable to invest in national infrastructure at the pace which a properly-regulated BT could. The BT/Openreach split would also have its own financial and time costs; which could be utilised elsewhere to improve the network instead. 

Askar Sheibani, CEO of Sorrento Networks, says: "With better governance, more transparency, and by giving other service providers improved access to ducts and poles, the UK telecoms market is about to get considerably more competitive, which should provide a real boost to the UK’s digital economy.  BT’s commitment to invest an additional £1 billion in Openreach to expand the provision of superfast broadband is particularly encouraging." 

Do you think Openreach should be split from BT? Share your thoughts in the comments.

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