Ofcom Communications Strategic Review proposes to open up BT’s broadband infrastructure

Ofcom’s initial conclusions of its digital communications strategic review, published on 25 February, propose wide reaching changes to ensure the effectiveness of fixed, mobile and content services. 

Reforms to Openreach which owns and operates BT’s broadband infrastructure are designed to ensure its independence from BT and allow access to other providers on non-discriminatory terms.  Openreach will be required to grant access to its ducts and poles to allow rivals to be able to roll out their own fibre networks.

Although Ofcom has proposed measures to facilitate greater access to broadband infrastructure by BT’s competitors, it has not gone as far as recommending the structural separation of Openreach from BT.  The reforms would require the broadband infrastructure business to be run on an arm’s length basis from BT, thereby removing the incentive and ability for BT to discriminate against competitors.  Ofcom has also called for greater transparency in terms of how profits are allocated across the BT Group.

Ofcom’s recommendations follow complaints by BT’s rivals including TalkTalk and Sky that the existing structure which allows Openreach to contribute to the profitability of the BT Group distorts competition.  Whether these companies will consider that the proposed solutions go far enough remains to be seen.

Many of the proposals will be implemented using Ofcom’s review and consultation process. Ofcom is expected to discuss the independence of Openreach with the European Commission in 2016.

Ofcom.  Strategic Review of Digital Communications: Initial Conclusions document. 25 February 2016