UK Telecoms Industry Disappointed BT Gets To Keep Openreach

BroadbandNetworks
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ANALYSIS: Rival broadband providers and mobile operators welcome moves to make Openreach independent but aren’t convinced it will solve underlying issues

Ofcom’s proposals that Openreach should be more independent and transparent so it works for the benefit of all communications providers, not just BT, have been welcomed by the company itself – mainly because it won’t have to sell the open access division.

The regulator claims the measures, such as tougher service targets and better access to Openreach’s infrastructure, will boost competition and service quality.

But what does the rest of the communications industry, much of which has been calling for separation, make of the proposals?

cloudSky CEO Jeremy Darroch

“Today’s proposal to create a legally separate Openreach is a step in the right direction, although falls short of the full change that would have guaranteed the world-class broadband network customers expect and the UK will need. In particular, leaving Openreach’s budget in the hands of BT Group raises significant questions as to whether this will really lead to the fibre investment Britain requires.”

TalkTalk CEO Dido Harding

“The creation of a legally separate Openreach is a step in the right direction, but we must not forget the history of the organisation. The intention ten years ago was to create a functionally separate division that served all customers equally, but that is far from what happened. The lack of clear rules and responsibilities meant that BT was (according to Ofcom) able to make £4billion in excess returns in a decade, and I fear that we’re repeating the mistakes of the past.

“Legal separation still means that a highly complex web of regulation, and BT has proven itself expert at gaming this system. There is nothing to suggest they will not continue to do so in the new system. Structural separation is cleaner, with less red tape – and removes BT’s ability to exploit loopholes in the regulation. In taking one cautious step forward, I fear Ofcom may in practice have taken five steps back.

“However we should remember this is just a consultation. Now is the time for the country to make their voices heard, and we are going to help them do that over the course of the next few months.”

CityFibre director of strategy and policy Mark Collins

data centre“Fundamentally, today’s proposals do not address Ofcom’s key objectives of reducing the country’s dependence on Openreach and encouraging essential investment in fibre. Whilst correctly identifying Openreach as the principal source of the industry’s dysfunction, it is hypocritical of Ofcom to focus on a restructured Openreach as a panacea.

“Further debate and navel-gazing as to the appropriate structure of BT will continue to create a period of uncertainty at a time when the industry needs clarity, direction and competitive investment. Openreach has a critical role to play, but it is not prudent to entrust them with sole responsibility for our digital future.”

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“We are disappointed that Ofcom has fallen short of structurally separating BT, the only measure that would have delivered genuine competition and prevented BT from favouring itself.  This is yet another example of UK regulators failing to stand up to BT after the CMA waved through its purchase of EE without any action following advice from Ofcom.”

Entanet head of service Neil Watson

BT Home Smartphone S 3“Ofcom’s chief executive, Sharon White, said that splitting Openreach off from BT completely – as we and many others in the industry have called for because we believe it’s the only way to ensure free and fair competition – would take too long.  This sounds like a bit of a cop-out. It remains to be seen just how ‘independent’ Openreach becomes while it is still a division within the BT Group.

“If there are improvements to responsiveness and service levels, it will be most welcome. But that’s a big ‘if’ in our view. For years, ISPs, CPs and customers have had to endure poor service levels from Openreach. But we don’t see how this organisational change will make Openreach perform better. It will still be part of BT, within the walls of the larger organisation. Until it is completely outside and independent of BT, we don’t believe it can ever deliver truly fair and balanced service levels to the industry and to the UK’s businesses and consumers.”

Chair of the Internet Telephony Service Providers Association (ITSPA), Eli Katz

“Members of ITSPA are pleased that Ofcom has proposed an increasingly independent Openreach, but has avoided full structural separation of Openreach from BT. In ITSPA’s opinion, full separation would have been unlikely to address our key concerns around performance and could have created more difficulties than it would have solved.

“It is now essential that Ofcom continues to work on tough performance rules for Openreach, setting out minimum requirements on fault repairs and line installation. We look forward to further details on performance requirements being published later this year and to improved measures for closely monitoring Openreach’s performance.”

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