BT avoids break up, but told to open up its Openreach network

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BT this week avoided the threat of being broken up by Ofcom in a ruling that instead means BT will need to open up its Openreach high-speed broadband network to give rivals greater access, and to increase its investment in the network by £1 billion.

Rivals, such as Vodafone, Talk Talk and Sky, had lobbied Ofcom hard to separate Openreach and BT in order to open up competition in the UK. Ofcom instead ruled that BT will have to give rivals greater access to its ‘local loop’ infrastructure and meet tougher targets on fixing faults in an attempt to shake up the UK broadband market.

Ofcom is looking to improve the UK broadband market, in which only 2 per cent of homes and businesses have a fibre connection all the way to the building. Ofcom also ruled that rivals could lay their own lines if they wish to in an attempt to boost competition and national coverage.

In its review, Ofcom noted that Openreach still has an incentive to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems. “For example, Openreach’s governance lacks independence from BT Group. The wider company has retained control over Openreach’s decision-making and the budget that is spent on the network, and other telecoms companies have not been consulted sufficiently on investment plans that affect them,” said the review.

It’s full ruling included Openreach being subject to tougher, minimum requirements to repair faults and install new lines more quickly. At the same time, Ofcom will introduce performance tables on quality of service, identifying the best and worst operators on a range of performance measures so that customers can shop around with confidence.

Finally, the regulator said that it intends to introduce automatic compensation for consumers and businesses when things go wrong.

Sharon White, chief executive of Ofcom, 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.”

About Author

Gary Eastwood

Gary Eastwood has over 15 years of experience as a technology and business journalist and editor. He has held editorship positions on customer magazines for Microsoft, CSC, and EDF, as well as on B2B magazine Mobile Enterprise. He is the former Deputy Editor of Computer Business Review. In a freelance role, Gary has contributed numerous features and articles to a broad range of publications, including New Scientist, Computer Weekly, MIS, Marketing Week, Corporate Financier, Real Business, Wireless Business Review, and driven marketing communications projects for clients, such as Intel, the Confederation of British Industry, IBM, Logicalis, the Department of Trade & Innovation, and many others. Gary has written many white papers on a range of ITC subjects for Datamonitor. He is also an editorial photographer and business videographer, and has authored and ghost-written four books on photography. He is the Co-Director of EastwoodMiddleton Publishing, which provides contract/customer magazines for a growing list of clients, and publishes the B2B magazine for business leaders, Strategist.