BT escapes forced break-up but faces tougher regulation

In its Strategic Review of Digital Communications published today comms watchdog Ofcom has stopped short of forcing the break-up of BT but told the company it must open up its telephone poles and ducts to allow rivals to build their own fibre networks and facilitate greater competition.

A forced break-up of BT is still possible if it fails to create more independence for Openreach under a stricter regulatory environment with wide-ranging proposals put forward by Ofcom.

BT Chief Executive Gavin Patterson said: "Openreach is already subject to regulated service standards and we are happy to work with Ofcom to improve them.

"Ofcom has explained why breaking up BT would not lead to better service or more investment and that structural separation would be a last resort.

"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.

"Our proposal includes a new governance structure for Openreach as well a clear commitment on investment. Openreach is already one of the most heavily regulated businesses in the world but we have volunteered to accept tighter regulation to bring matters to a clear and speedy conclusion."

"We are happy to let other companies use our ducts and poles if they are genuinely keen to invest very large sums as we have done. Our ducts and poles have been open to competitors since 2009 but there has been little interest to date. We will see if that now changes."

ITSPA welcomed Ofcom's announcement on the future of Openreach but warned that constant scrutiny is required to ensure it meets its new obligations.

In response to the regulator's review, Eli Katz, Chair of ITSPA, said: "We believe that Ofcom's proposals for further scrutiny and an increased focus on service quality will ensure a fairer marketplace for all Openreach customers while also supporting vital investment in faster broadband services.

"We also support the proposals to encourage the roll out of new 'fibre to the premise' networks by ensuring competitors have better access to BT's mast and duct infrastructure.

"This will improve competition, drive up performance and service levels as well as reduce costs for both individuals and businesses in the UK."

In other areas of the review ITSPA supports Ofcom's continued commitment to improving the switching process for consumers and call for the regulator to reform the current number portability process.

"It is simply not fit for purpose in its current state and should be a priority in Ofcom's work in the switching area," added Katz.

CityFibre CEO Greg Mesch also welcomes the recommendations made by Ofcom in its review.

"The report’s conclusions are clear, that to meet the UK’s current and future digital communication needs and enable widespread availability of competing fibre to the premises networks, a strategic shift to support large-scale investment in end-to-end fibre is required," he stated. 

"To accelerate this, Ofcom recommends the promotion of investment and competition, and provisions such as the assurance of meaningful access to BT’s physical infrastructure. 

"The conclusions in Ofcom's report will considerably strengthen CityFibre’s capability to drive forward an alternative fibre future for Britain." 

Dido Harding, CEO of TalkTalk Group, commended the watchdog but is concerned that words will not be translated into action. She said: "Ofcom has done well in identifying many of the worst problems, including recognising, finally, that BT's control of Openreach creates a fundamental conflict of interest which hurts customers.

"But having accepted all this, Ofcom has produced 100 pages of consultation with little concrete action behind it. The risk is that we end up with 10 more years of debate and delays, rather than facing into the problems and delivering improvements for frustrated customers now.\"

ISPA Chair James Blessing also welcomed Ofcom's 'ambitious vision and proposals' on how the UK's connectivity needs can be transformed over the next decade. 

"With ISPA members investing heavily in their networks across the country - locally and nationally utilising a range of technologies - ISPA supports the report’s objectives to improve performance, enhance competition and investment and make rolling out networks easier in this data-driven age," he said.

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