BT must open up its Openreach network, says watchdog

The telecoms regulator Ofcom has ordered BT to open up its network of telegraph poles and underground tunnels to allow its rivals to build their own broadband networks.

The broadband service in the UK had been under review by Ofcom since July last year and, once again, it raised the possibility that BT might be ordered to spin off its broadband infrastructure service.

The review into the broadband service offered by BT and others has resulted in six meaures:

A strategic shift to large-scale investment in more fibre: "We will help create more choice for people and businesses, while reducing the country's reliance on Openreach," the regulator said in its conclusions. This will mean new 'fibre to the premise' networks to homes and businesses and "as an alternative to BT's planned innovation in copper-based technologies". This means that, BT will be required to open up its network and to allow rivals to place their own fibre cables along BT's telegraph poles and in its underground cables.

'A step change in quality of service': Ofcom says, "it will publish service quality performance data on all operators, and look to introduce automatic compensation for consumers and small businesses when things go wrong." Later this year Ofcom will introduce, "tougher minimum standards for Openreach with rigorous enforcement and fines for underperformance".

Reforming Openreach: Ofcom said it is necessary to overhaul Openreach's governance and strengthen its independence from BT and make its own decisions on budget, investment and strategy - such as the deployment of new networks.

Broadband as a right: Ofcom says it will work with the UK government, "to make decent, affordable broadband a universal right for every home and small business in the UK". It then sets a minimum requirement of 10Mbit/s for everyone, and then rising, "in line with customer demand over time". Ofcom says it wants the same for mobile customers.

Empowering consumers to make informed choices: "We will give consumers real power to exercise choice through much more accessible and engaging information on the services available to them", says the regulator.

Deregulate and simplify whilst protecting consumers: In line with the regulation Ofcom wants to step back "from hands-on oversight" of all this. "Our ultimate goal is to improve communications services for everyone, not to increase regulation".

BT CEO Gavin Patterson said: "Ofcom have today explained why breaking up BT would not lead to better service or more investment and that structural separation would be a last resort. We welcome those comments. The focus now needs to be on a strengthened but proportionate form of the current model and we have put forward a positive proposal that we believe can form the basis for further discussions with both Ofcom and the wider industry.

Commenting on the news, Ovum's regulation practice leader, Matthew Howett, said, "For now, BT has avoided the need to spin off Openreach, although it has ensured that the threat of separation remains in place until a strengthened model of functional separation can be agreed".

While broadly welcoming Ofcom's judgement, Richard Neudegg, head of regulation at uSwitch.com said, "we urge Ofcom not to lose sight of the other issues considered in its review - especially when there are genuine threats to consumer engagement and competition which must be tackled".

"By attempting a repeat of the tactics used in its decade-old Strategic Review and leaving open referring BT to a competition authority, Ofcom is clearly hoping to force significant change on how Openreach operates within BT Group," Neudegg said.

But the worry is that all this could create "a convenient distraction for the industry" and so, "we urge Ofcom not to lose sight of the other issues considered in its review - especially when there are genuine threats to consumer engagement and competition which must be tackled".

Further Reading:

Is your broadband really 'broadbad'? MPs call for network rethink

BT-EE deal gets go ahead - so what's next for UK broadband?

Microsoft's plan to connect billions using 'white space' runs into trouble

Quickflix to reposition as tech, ecommerce, entertainment company: CEO