Ofcom in talks to separate BT and Openreach broadband

Communications watchdog Ofcom may break up BT and its internet broadband business Openreach.

The talks come following complaints that the network’s performance on behalf of its competitors has often been poor.

BT is required to provide equal access to its competitors through Openreach’s broadband network.

Ofcom is allegedly reviewing the decision, which could lead to new rules regarding faster line installations and repairs.

Other rules could see BT allowing different networks to provide phone and broadband services without using the firm’s network.

According to The Guardian, Sharon White, chief executive of Ofcom, said: “This review is about ensuring people get the best possible communications services, wherever they live and work.

“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."

Mark Skilton, professor of practice at Warwick Business School, believes the plans are not surprising following Ofcom’s push to further deregulate the UK telecoms and broadband market.

"Deregulation started over 10 years ago with telecoms being required to open up their line infrastructure to third parties. Performance of this is critical both in the sense of achieving ‘net neutrality’, such that the services are consistent and reliable, but also for extending the range of customer broadband choice,” added Skilton.

"This review suggests that ‘back-to-back’ network connectivity to support this model must work end-to-end, otherwise it fails to deliver value. It also puts into question how the ‘quad play’ bundle works if performance issues in the network are underperforming. To do quad play well there needs to be a strong network, but by using deregulation the market forces everyone to keep on their toes."

Paolo Pescatore, director of multiplay and video at CCS Insight, commented: “The big news here is the proposed break-up of BT. Many of its rivals have been lobbying hard for this for some time and they’ve clearly mounted enough pressure to raise concerns. In response, BT has reacted by calling for a detailed review in the pay TV market.

“The major focus of the latest strategic review of the digital communications market is all about how well competition is delivering benefits to consumers and businesses.

"With this in mind, it seems that a full separation is unlikely as stated by Ofcom. Furthermore, Ofcom has acknowledged that the current system, whereby BT operates Openreach as a separate unit, has provided choice.”

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