Ofcom has made a bold move in terms of getting BT to step in line, with the organisation issuing a formal notification which requires the legal separation of BT and Openreach.
This has been a long-running saga since an Ofcom review in the summer of 2015 suggested that BT’s Openreach – the networking arm which owns all the broadband deals infrastructure – should be distinct from the rest of the company to ensure a fair and level playing field for all broadband providers, BT included.
The regulator’s fear is that as things are now, BT can too easily favour its own retail business when Openreach is making decisions.
This summer just gone, Ofcom made demands of BT for its broadband division to become a separate entity within the company – as opposed to being spun off completely – and now the watchdog is moving to enforce this, after what it notes is BT’s failure to offer voluntary proposals to address its concerns regarding fair competition in the broadband arena.
In a statement, Ofcom said: “We are disappointed that BT has not yet come forward with proposals that meet our competition concerns. Some progress has been made, but this has not been enough, and action is required now to deliver better outcomes for phone and broadband users.”
Notifying the EC
Thus Ofcom is notifying the European Commission of its intention to press ahead with plans to require Openreach to become a distinct company (within BT) that has its own board, and greater independence from BT when it comes to making decisions about broadband investments.
Ofcom did, however, also say that it would “remain open to BT bridging the gap between its proposal and what is required to address our strong competition concerns”.
Dan Howdle, consumer telecoms expert and director of communications at Cable.co.uk, commented: "It's tough to read whether BT's heel-dragging is as a result of a tactic with the intention to deliberately delay and undermine the process, or whether, rather like Brexit, the process of separating Openreach is simply too vast and complex to be fully planned out in such a short period of time.
"That Ofcom has had to speak out of its 'frustration' suggests to me there is more to this delay than bureaucracy and red tape – that unwillingness to comply is also playing some part."
Indeed, this would seem to be a major prod for BT to get its act together in terms of ‘bridging gaps’ and satisfying Ofcom.
Although doubtless this process will be a long road, it’ll be interesting to see what BT’s immediate response is to this upping of the stakes. At any rate, in the long run, this pressure on BT can only be a good thing when it comes to competitively priced broadband.
As Ofcom puts it, this separation will “serve all customers”, and hopefully not just in terms of pricing, but also broadband coverage and availability.