Member Article

Ofcom orders BT to open up its Openreach network

The government’s telecoms regulator Ofcom has ruled that BT must open up its network to competition, following the release of its Digital Communications Strategy.

However the report, which looks at the full spectrum of the UK’s telecommunications landscape, stopped short of recommending a full split between BT and its Openreach division.

Openreach monopoly

Today’s findings had been widely anticipated in the industry, as big players such as Sky and TalkTalk had voiced concerns that BT’s Openreach monopoly gives it an unfair advantage over competitors.

Openreach is the division of BT which owns the fibre and copper wiring that runs from the local telephone exchange to homes and businesses, commonly referred to as ‘the last mile’.

Totalling 76m miles of cable across the UK, access to this cabling is then sold to the vast array of over 500 other service providers nationwide.

While this arrangement was set up by Ofcom in 2006 in order to provide fair and equal access to the broadband network, there has been widespread criticism that the telecoms giant has underinvested in the Openreach network leading to poor service.

However, BT argues that it is the only company with the size to manage and roll out large infrastructure projects such as the installation of fibre-optic cables for superfast broadband provision.

Ofcom’s findings

Despite BT’s arguments, Ofcom has today advised that Openreach should be opened up so that it operates with more independence from BT Group.

The report states that ‘Openreach still has an incentive to make decisions in the interests of BT’, which leads to inevitable competition problems.

It also argues that other telecoms companies had not been sufficiently consulted on changes and developments to the network despite the inevitable impact on their businesses.

While more detailed recommendations will follow in the coming year, the regulator has advised that Openreach must overhaul its governance so that it makes its own decisions on budget, investment and strategy.

Sharon White, Ofcom Chief Executive, believes the plans will provide better value to customers and help improve network coverage and quality.

She said: “People across the UK today need affordable, reliable phone and broadband services. Coverage and quality are improving, but not fast enough to meet the growing expectations of consumers and businesses.

“So today we’ve announced fundamental reform of the telecoms market - more competition, a new structure for Openreach, tougher performance targets, and a range of measures to boost service quality.

“Together, this means a better deal for telecoms users, which will improve the services and networks that underpin how we live and work.”

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