Ofcom finally gets tough on BT with Openreach ultimatum

Ofcom has finally decided that BT is to separate from its Openreach business. The regulator has, after much deliberation, concluded the long running saga, and it’s not good news for BT.

Tim Skinner

November 29, 2016

4 Min Read
Ofcom finally gets tough on BT with Openreach ultimatum

Ofcom has given BT one final kick up the arse with concrete action backing up its threat to legally separate its Openreach business. The regulator has, after much deliberation, began proceedings with the European Commission, and it’s not good news for BT.

It wouldn’t be sensationalist to call the protracted discussion over Openreach a saga. As you’d expect, Telecoms.com has been tracking the whole ordeal and it stretches back nearly two years, when Openreach first came under pressure back in early 2015.

As the former state monopoly and clear market leader in both fixed and mobile, BT has constantly been bedraggled by pleas to the media for more parity by its rivals. The “Fix Britain’s Internet Campaign” was started earlier this year by TalkTalk, Sky and Vodafone, which publicly called on Ofcom to force separation of BT from Openreach.

The gripe comes from an apparent lack of will from BT to develop an attractive fibre to the home proposition through Openreach. There’s perfectly valid arguments from either side of the debate, with BT saying for the time being it just isn’t feasible to reach fibre in densely populated urban areas, principally down to the cost of deployment. Its opponents, however, say full fibre is essential for the UK to prosper in the future as a digital leader, with BT’s G.fast proposition indicating an over reliance on an ailing and ageing copper infrastructure.

The Fix Britain’s Internet campaign called on anyone and everyone who cares to submit a response to Ofcom’s public consultation period. Ofcom confirmed today that 94,000 people responded to the consultation via “an online campaign”, presumably the aforementioned, of which 90,000 were identical responses pre-written and submitted via the Fix Britain’s Internet website.

So they’ve got to be feeling pretty chuffed with themselves, those dudes over at TalkTalk, Sky and Vodafone. That’s pretty much mission accomplished, as far as they’re concerned. Surely?

It’s not been a secret that these guys, while meaning well, have been ludicrously vocal throughout the whole saga with a bunch of belligerent comments that only serve to dig at BT. Well, despite Ofcom pretty much giving them what they want, Sky STILL couldn’t help itself.

“Let’s not forget why we are here – BT Openreach has continued to fail consumers,” it said in a statement. “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.”

Oh give it a rest.

Ofcom has already said it is preparing its notification for the European Commission, in which it will detail its intention to legally separate Openreach from BT. It will, of course, still be a grey area, in which Openreach would technically still be considered as a BT subsidiary. Sky’s relatively antagonistic comments continue while they push for full structural separation, i.e. the laborious process of ripping BT and Openreach apart from one another.

BT told Telecoms.com it reckons it still has a chance of keeping Openreach in the BT family, despite Ofcom saying it was “disappointed” that BT hadn’t come forward with proposals that meet their competition concerns.

“We put forward proposals in July that we believe are fair and sustainable, and that meet Ofcom’s objectives without disproportionate costs,” BT told Telecoms.com in a statement. “We are implementing these proposals, and have just appointed Mike McTighe to be the first chairman of Openreach.

“We are in discussions with Ofcom on two outstanding issues, the reporting line of the Openreach CEO and the form of legal incorporation. We will continue to work with Ofcom to reach a voluntary settlement that is good for customers, shareholders, employees, pensioners and investment in the UK’s digital future.”

Despite BT appointig an independent chairman of Opennreach, its comments suggest it still isn’t getting the point. Not many people like BT at the moment, and Ofcom has finally run out of patience with the telco. This looks like a “get your bloody act together or else” shot across the bows from Ofcom, as it seeks to get BT to hurry up and get in line.

If anything it’s actually something of a relief to see this coming towards something vaguely representing a conclusion. No doubt there’ll be plenty more lobbying and mud getting slung before Openreach is officially separated from BT.

About the Author(s)

Tim Skinner

Tim is the features editor at Telecoms.com, focusing on the latest activity within the telecoms and technology industries – delivering dry and irreverent yet informative news and analysis features.

Tim is also host of weekly podcast A Week In Wireless, where the editorial team from Telecoms.com and their industry mates get together every now and then and have a giggle about what’s going on in the industry.

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