Ofcom to consider breaking up BT


BT faces a battle to retain control of the national telecoms network, after the communications watchdog said that forcing a spin off “could deliver competition or wider benefits for end users”.

Ofcom published a discussion paper on its Strategic Review of Digital Communications, the first stage in a wide-ranging, once-a-decade overhaul of the communications market.

It said it would seek views on separating BT from Openreach, its network division, as part of efforts to ensure competition delivers benefits to consumers and businesses.

According to The Telegraph, Ofcoms said a separate Openreach “would remove BT’s underlying incentive to discriminate against competitors”.

Under the current regime, Openreach is “functionally” separate from the rest of BT, meaning it is obliged to give competitors the same access to its network as the parent company.

However rivals led by TalkTalk and Sky have complained that Openreach does not fix faults or install new lines fast enough and say that it is related to its links with BT.

Ofcom added: “Separation could also offer ways to simplify existing regulation. However, the process would be challenging and it may not address some concerns relating to Openreach – such as service quality, or the timing and level of investment decisions.”

The watchdog emphasised that full “structural” separation of BT was just one option it will consider based on responses to the discussion paper.

It said it could also choose to maintain the status quo, strengthen functional separation with more rules, such as wholesale price controls, or partially deregulate to stimulate competition and encourage network investment.

Ofcom said investment in communications infrastructure was also generally a priority for the review.

It said households needed broadband speeds of at least 10 megabits per second to use video streaming services, but noted that 15pc cannot currently get such a service.

The regulator will look at how to improve coverage, as well as how it can encourage investment in the next generation of ‘ultrafast’ broadband services, and in mobile network coverage and quality.

It will consider BT’s call to be allowed to switch off its traditional voice calling network [LINK], while expressing concern that shifting all calls over the internet may affect the resilience of lifeline services needed by elderly and disabled people in emergencies.

Mobile operators such as Vodafone will also be pleased by Ofcom’s recognition that the rise of WatsApp and other unregulated, internet-based competition to their services “may create a case for less regulation on mobile operators, or for extending existing rules to internet-based services”.

To help consumers navigate the increasingly complicated market, Ofcom said it will examine new ways to compare services.

The impact of the trend towards bundling broadband, home phone, mobile and pay-TV will be examined. Ofcom suggested that competition could be harmed, particularly by pay-TV, arguing that “if a retail provider cannot offer attractive content, this is likely to reduce competition across all services in the bundle.”

Sharon White, Ofcom Chief executive, said: “We want to promote competition, investment and innovation, so that everyone benefits from even better coverage, choice, price and quality of service in years to come.”

The next phase of the review will seek evidence and responses to today’s discussion paper until early October, before Ofcom publishes its proposals for the next decade of communications regulation.