Ofcom tells BT to open up infrastructure to rivals

Openreach should be run at ‘arm’s length’, regulator says in review, but BT should keep control of cable network – for now

BT has been told to help rivals use its infrastructure to lay fibre cables that are faster than its own copper network, as part of a review of Britain’s broadband needs by the regulator Ofcom.

In a once in a decade review, the regulator stopped short of recommending that BT be forced to split off Openreach, the division that owns the broadband infrastructure.

The verdict drew criticism from TalkTalk and Sky, who said Ofcom had not gone far enough.

TalkTalk’s boss, Dido Harding, said splitting Openreach from BT entirely would ensure “BT isn’t the one making the decisions on whether or not there is more money in Openreach and that’s exactly why I think they should be separate”.

Harding also said it was “deeply suspicious” that BT boss Gavin Patterson has pledged to spend more on Openreach in the run-up to the decision. “Independence would mean that Openreach makes the right decisions for their customers rather than the decisions that are right for BT Group,” she added.

A Sky spokesperson said: “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.”

The Lib Dem leader Tim Farron said Ofcom had “bottled it” and called on the government to force a full split.

Ofcom’s more moderate proposal would see the network run at “arm’s length”, it said, with separate people making decisions on its budget, investment and strategy. This would “remove the incentive and ability to discriminate against competing providers”.

Chief executive Sharon White conceded this could also involve an unusual situation in which the likes of Sky and TalkTalk get a seat on the Openreach board.

But Ofcom left open the possibility of revisiting the nuclear option of full separation if BT did not comply on key issues. It said this might prove to be the “cleanest and most clear cut long-term solution”.

One source familiar with the situation said this was not a negotiating tactic to force BT’s hand, adding that full separation was “unequivocally not off the table”.

White said it was no “airy-fairy” threat, insisting Ofcom was prepared to revisit the idea of full separation, which it deems too costly and complicated, if BT does not cooperate.

The BT chief executive, Gavin Patterson, said: “A great deal of what they are proposing is already in place and we are open to discussions about how the current rules can be amended and updated.”

Ofcom also gave a series of recommendations to improve customers’ experience. These include automatic compensation for customers and businesses when the Openreach network experiences problems. The regulator wants to introduce league tables and make it easier for customers to switch provider.

The regulator also wants greater transparency on what Openreach is doing, amid complaints of poor service by BT and claims by rivals that being forced to use the network puts them at a disadvantage.

Ofcom said Openreach directors should be forced to consult customers – such as Sky and TalkTalk – on its investment plans and provide more information about how it allocates costs and assets.

It should also build a database of its telegraph poles and ducts, to allow rivals to plan where they might want to lay ultrafast fibre to compete with BT’s copper network.

Rivals already have access to BT’s infrastructure but the regulator plans to make it less expensive for them to use.Patterson cast doubt on whether rivals would take up the offer, despite complaining of the slow pace of fibre roll-out. “Our ducts and poles have been open to competitors since 2009 but there has been little very interest to date. We will see if that now changes,” he said.

The regulator also wants to introduce tougher minimum service requirements to make sure BT repairs faults more quickly, an area in which rivals say it is dragging its feet.

Ofcom said BT could be fined “hundreds of millions of pounds” if it fails to meet obligations, adding that the performance of its copper network was currently “on a knife edge”.

There will also be a new government-backed universal obligation to provide fast broadband to every home and business in the UK, starting at 10 megabits per second.

Although Ofcom does not have powers to impose any changes on BT immediately, it can take its plans to the European commission for approval. At that point it can impose its recommendations on the telecoms giant. “A voluntary, binding settlement is in everyone’s interests and we will work hard to ensure one is reached,” said Patterson.

Ofcom’s chief executive, Sharon White, said: “People across the UK today need affordable, reliable phone and broadband services. Coverage and quality are improving, but not fast enough to meet the growing expectations of consumers and businesses.

“So today we’ve announced fundamental reform of the telecoms market – more competition, a new structure for Openreach, tougher performance targets, and a range of measures to boost service quality. Together, this means a better deal for telecoms users, which will improve the services and networks that underpin how we live and work.”


Rob Davies

The GuardianTramp

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