Ofcom tells BT it must open up its cable network
The communications regulator Ofcom has told BT that it must open up the UK’s cable network to allow competitors to provide internet services directly to homes and businesses.
As part of its strategic review into the UK’s digital communications markets, Ofcom has concluded that BT’s Openreach must be reformed and that competitors, including Sky and Virgin Media, must be given access to its network of telegraph poles and underground tunnels so they can build their own advanced fibre networks.
The regulator stopped short at enforcing a full split of Openreach from BT, but competitors will get more say on strategic and budgetry-making decisions – and the option of a break-up is still on the table.
Ofcom’s last strategic review began in December 2003 and led to the creation of Openreach in 2005, through which BT is required to provide access to competing providers on equal terms, for them to offer telecoms services to consumers.
However the market has changed hugely since – including BT’s standing within it – and critics have claimed Openreach has stifled innovation, competition and quality of service – as well as swing decisions in favour of BT’s business interests.
“Openreach needs to change,” Ofcom said today, “taking its own decisions on budget, investment and strategy, in consultation with the wider industry.”
Ofcom also said it intends to introduce tougher rules on faults, repairs and installations; transparent information on service quality; and automatic compensation for consumers when things go wrong.
Additionally, the regulator wants to see better broadband and mobile coverage.
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“Ofcom will work with the Government to deliver a new universal right to fast, affordable broadband for every household and business in the UK. We also intend to place new obligations in future spectrum licences to improve rural mobile coverage,” it said.
A new strategy to promote large-scale roll-out of new ultrafast broadband networks, based on cable and fibre lines, as an alternative to the partly copper-based technologies currently being planned by BT, has also been announced.
Supporting investment by rival providers will reduce the country’s reliance on Openreach, and increase competitive pressure on its network, Ofcom said.
To help bring this about, Openreach will be required to open up its telegraph poles and ‘ducts’ – the small, underground tunnels that carry telecoms lines. Using these, rival providers will be able to build their own fibre networks, connected directly to homes and offices.
Commenting on the news, BT’s chief executive, Gavin Patterson, said the company will propose a new governance structure for Openreach as well as offer a “clear commitment” on investment.
“We are happy to let other companies use our ducts and poles if they are genuinely keen to invest very large sums as we have done,” he said. “Our ducts and poles have been open to competitors since 2009 but there has been little very interest to date. We will see if that now changes.
“We are keen to understand and address Ofcom’s concerns so we will review their paper in detail. 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 and we will work hard to ensure one is reached.”
Welcoming Ofcom’s response, a Sky spokesman said: “BT must now be held to account for improving service and enabling delivery of fibre to Britain’s homes and businesses.
“Ofcom’s actions today are not the end of the debate but a staging post towards delivering the network and service that Britain needs. We believe the simplest and most effective way to fix the current broken market structure is for Openreach to be completely independent. We are pleased to see that separation is still on the table.
“We will work with Ofcom to deliver change at Openreach and we look forward to playing a positive role in helping make Britain a digital world leader.”
Openreach, with the help of £1.7bn of public money, is currently rolling out superfast broadband across the UK with the aim of reaching 95% of UK homes by next year.