The regulator has reserved the right to push for a break up of the former telecoms monopoly if it does not improve the performance — and increase the independence — of its Openreach division, which controls the country’s broadband lines.
Ofcom has also said it would start discussions with the European Commission over Openreach which suggests that Sharon White, the chief executive of the regulator, is willing to force change on BT if it does not agree to reform, reports The Times.
It has also set out a series of plans to compensate consumers and businesses “automatically” if broadband or other issues arise. The regulator said that customers left out of pocket would no longer need to seek redress themselves.
BT’s rivals including TalkTalk, Vodafone and Sky have fought a high-pitched battle to have the former monopoly split up. Ofcom may have put that option on the back burner but did make bold statements that the current structure of the market has “competition problems” as Openreach still has the incentive to “make decisions in the interests of BT”. It argued that the current structure of the market, established in 2005, has enshrined BT’s incentive to “discriminate against competing providers” through its ownership of Openreach.
Ofcom wants Openreach to have an independent board and more control over its own budget. BT has made a series of offers to the regulator but has been loathe to hand control of the budget to a ringfenced Openreach. Ofcom said today that BT’s proposals did not “go far enough”.
Instead of breaking up BT, Ofcom has moved to open up the company’s national network of telephone poles and underground ducts to rivals to promote more investment in fibre optics. The move was described as a “strategic shift to large-scale fibre investment” to provide an alternative to BT’s plans to sweat its existing copper network.
The regulator has made similar moves to open up ducts and poles in the past to promote investment but few of BT’s rivals have been able to build networks to compete with Openreach.
Ms White said: “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.”
BT welcomed the decision not to split up the company and said it would continue to work with the regulator to avoid a messy regulatory battle to force through changes. “A great deal of what they are proposing is already in place and we are open to discussions about how the current rules can be amended and updated. A voluntary, binding settlement is in everyone’s interests.”
A TalkTalk spokeswoman said that the Ofcom statement was a case of “too much consultation, not enough action”.
Ofcom said that since Openreach was originally separated within BT, the company had breached its obligations in a “non trivial” manner some 59 times and that the number of incidents has not declined over the course of the last decade.
