Ofcom has launched its Digital Communications Review and a major part of the review is considering separating Openreach from BT not just functionally but making it a stand alone firm with its own investors and shareholders. Making Openreach its own entity rather than a body with various firewalls around it seems to be a popular option, but Ofcom is considering several options and will have to consider the impact on the UK overall, rather than just doing what BT and Openreach competitors want as it helps improve their business model.
- "Retaining the current model, where Openreach operates as 'functionally separate' from BT, and using regular market reviews to address any concerns around competition;
- Strengthening the current model by applying new rules to BT - such as controls on its wholesale charges with stronger incentives to improve quality of service, or tougher penalties if BT falls short;
- Separating Openreach from BT could deliver competition or wider benefits for end users. It would remove BT's underlying incentive to discriminate against competitors. Separation could also offer ways to simplify existing regulation. However, the process would be challenging and it may not address some concerns relating to Openreach - such as service quality, or the timing and level of investment decisions;
- Deregulating and promoting competition between networks. Virgin Media and a variety of smaller operators own networks, which allow them to provide phone and broadband services without using BT's network at all. This kind of 'end to end' competition, which sometimes involves running fibre lines directly to premises, can help incentivise Openreach to improve its infrastructure. However, it could also lead to duplication of networks and weak competition.Options Ofcom is considering
A major consideration in what Ofcom will do is that any changes may introduce a period of uncertainty and if there was a magic investor looking to invest several billion in the nascent UK FTTH market, they will be now be waiting on the outcome of this review.
We see the regular complaints about how faults and problems where line access speeds drop and getting Openreach to investigate is difficult to impossible so there is something that does need fixing and Openreach is usually very adamant that it is working to improve how it works. The problems over the time it takes to get new lines installed or just a new broadband connection activated on an existing line will not be magically solved by any of the options especially as any structural changes will take years to implement. For the problems that exist now the only solution is for Openreach to work harder and at the same time communications providers to handle their Openreach interactions better, it is currently too easy for providers to simply blame BT or Openreach for any issues, when it can be the provider is at fault.
So fingers crossed Ofcom can act in the short term to ensure Openreach and the industry address the current complaints over timescales and customer service and address the long term infrastructure debate, which at one end has people calling no-one to rock the boat and at the other end a brand new nationalised and heavily resourced digital telco who is tasked with a national FTTH network build.