Ofcom
has issued a progress report recommending a partial separation of BT Group from
its internet infrastructure business, Openreach. But this measure is short of the full
unbundling that BT’s competitors have been pushing for.
Ofcom
began its review of digital connection capacity in March last year. Early in 2016 it said that Openreach should
be more independent from BT so as to deliver necessary investment in high-speed
broadband infrastructure over the next decade.
Ofcom
is seeking to open up Openreach’s ducts and poles to allow competitors to
connect their own systems.
Current
regulations require Openreach to allow access to all customers on non-discriminatory
terms. Ofcom believes that BT still has
the ability and incentive to make investment decisions that favour its own
retail operations, rather than the network as a whole.
Under
the proposal Openreach would be a separate company with its own board but the size
of its budget would ultimately be controlled by BT.
This
semi-separation might be seen as a cautious move by Ofcom. A full divestment would take time and create potential
for market disruption. But the proposed
approach will leave many disappointed by leaving investment decisions in the
hands of BT, albeit, such decisions would need to be made in the interests of
all Openreach customers. If Ofcom is not
satisfied that it can hold BT accountable under the new model or roll-out,
speeds and service fall short of expectations, a full separation might need to
be considered.
Ofcom press release and progress update:
supporting investment in ultrafast broadband networks, 26 July 2016
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