Disruption has both a power for good and for bad and Ofcom is hoping that the enforced legal separation of Openreach announced today will produce a national local loop operator that can invest MORE in pure fibre infrastructure and also improve customer service.
"Ofcom is pressing ahead with its plans to improve broadband and telephone services for people across the country, pursuing better service quality and encouraging greater investment in networks. Creating a more independent Openreach – which works in the interest of all providers, not just BT – is an important part of achieving this.
We are disappointed that BT has not yet come forward with proposals that meet our competition concerns. Some progress has been made, but this has not been enough, and action is required now to deliver better outcomes for phone and broadband users.
We are now preparing to notify the European Commission of our intention to implement these plans, requiring the legal separation of Openreach to make it more independent. Throughout this process, we remain open to BT bridging the gap between its proposal and what is required to address our strong competition concerns."Ofcom on split
One of the problems with old-school regulation is that it takes so long to make a decision and with the campaigning for Ofcom to carry out a split it feels like this has been going on for a couple of years, alas Ofcom is still holding out a small branch of peace to the BT Group.
Openreach will still be a fully owned subsidiary of BT Group, or put another way Ofcom has not gone for the most difficult option that was likely to be mired in years of legal battles where the only winners would be law firm profit margins. The evening before Ofcom published its decision the first ever Chairman of Openreach was announced, Mike McTighe who will take his seat in January and with eight years experience of Ofcom should be well used to the way the regulator works.
The legal separation does not mean the new Openreach is off the leash, it will remain a heavily regulated operation and possibly even more so, as decisions by the Openreach Board will be watched by Ofcom to ensure no undue influence from the BT Group exists.
The question moving forward now, is as a wholly-owned subsidiary how much new capital will Openreach have access to and with BT Consumer/BT Wholesale still its largest single customer by some margin how this will translate into influence on Openreach decisions.
The campaign by TalkTalk and partners is recognised by Ofcom announcing it received 90,000 identical submissions to the consultation and a further 4,000 non-standard responses with concerns over speeds, fibre availability and quality of service from various providers.
The massive unknown is whether this means a scrapping of G.fast and a pure fibre to the premises roll-out as Openreach adopts a 100% pure fibre future, but even if this was announced today the key would be the delivery timescale and the extra work involved is unlikely to resolve the complaints about service levels in the short to medium term. Alternatively it may be business as usual at the coal face, and existing roll-out plans announced will continue as it will take time to steer the ship down a different course.
Update 9.45am Sky has issued a response:
"Let's not forget why we are here - BT Openreach has continued to fail consumers. This is why we have always said that we want a solution that is clear and executable and in the best interests of consumers and industry. We will now watch closely as to how Ofcom executes its proposals."Sky spokesperson on legal separation
Update 1pm A statement from ITSPA arrived earlier, but was delayed while we ensured broadband package listings were up to date post Black Friday Sale.
"Members of ITSPA are pleased that Ofcom has so far held its ground in relation to both a voluntary plan from BT that didn’t address all their concerns, and the more radical calls for a riskier full separation. Whilst we are aware of the range of opinions across the industry, and indeed amongst some members of ITSPA, in our opinion the proposals have a chance of delivering the fastest and least disruptive reforms to Openreach’s practices. This should result in improvements in Ofcom’s performance, service levels and reduce costs for both individuals and businesses in the UK.
Despite ITSPA’s support and preference for legal separation, the option of full structural separation should not be completely ruled out if the reformed Openreach still suffers from the same issues regarding performance as it did prior to legal separation."Eli Katz, Chair of ITSPA