Ofcom has listened to repeated requests from BT’s (LSE:BT) rivals and will consider a potential structural separation of the incumbent’s infrastructure division Openreach in its strategic review of the UK’s digital communications.
Updating the…
Ofcom has listened to repeated requests from BT’s (LSE:BT) rivals and will consider a potential structural separation of the incumbent’s infrastructure division Openreach in its strategic review of the UK’s digital communications.
Updating the industry on its progress on the review, which was announced in March, the communications regulator also said it would look at bundling and switching providers in the British pay-TV market – something BT had lobbied to add.
In a statement, Ofcom said that separating Openreach from BT could “deliver competition or wider benefits for end users” and “remove BT’s underlying incentive to discriminate against competitors”, alongside simplifying existing regulation.
However, Ofcom said any separation “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.”
Ovum research analyst Matthew Howett interpreted the watchdog’s language to mean that it was very cautious about splitting off Openreach.
“While Ofcom recognises there are challenges with Openreach, in particular in relation to service quality, it heavily suggests that further separation will not address these, and could ultimately be disproportionate,” Howett said. Nevertheless, he said there could be tweaks to Openreach’s model.
Sharon White, Ofcom chief executive, said: “Our priorities are clear. 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.”
Openreach and pay-TV are just two of the issues presented in a wide-ranging discussion document published by Ofcom today. It is seeking evidence and responses to the discussion document by 8 October 2015.
The study comes as the UK telecoms sector is in a state of flux, with a fixed/mobile tie-up agreed between BT and EE, and the proposed four-to-three mobile merger that would see O2 combined with Three.
