Procurement · 29 November 2016

Ofcom enforcing Openreach broadband reforms after BT stalls

BT Openreach
Ofcom first raised concerns over the accountability of BT Openreach in July 2016

Communications regulator Ofcom has issued a notice stating that it will formally pursue the legal separation of Openreach from BT.

Ofcom has stated that it will notify the European Commission of legal proceedings after BT failed to provide voluntary proposals for reforms to Openreach, the division of BT that maintains the UK’s telecoms network.

The UK’s telecoms regulator initially laid out concerns of BT Openreach’s monopoly of the UK’s broadband network in July. Ofcom presented BT with a proposed model of separation from Openreach to reach “the greatest degree of independence from BT Group that is possible”. 

Following BT’s failure to provide Ofcom with an effective strategy for reform, the new plans will require a formal legal separation that would see Openreach become a distinct company, removing the conflict of interest between Openreach and BT customers.

Commenting on Ofcom’s pursuit of a legal split, Cable.co.uk‘s director of communications, Dan Howdle, suggested that BT’s “heel-dragging” hinted more towards a deliberate tactic to delay the separation than genuine efforts to complete the process.

“That Ofcom has had to speak out of its ‘frustration’ suggests to me there is more to this delay than bureaucracy and red tape – that unwillingness to comply is also playing some part,” Howdle said in a statement.

Ofcom has stated that enforcing greater independence for Openreach will create better access for customers, delivering fast broadband to meet the needs of business owners and freelancers across the country.

The regional disparity in fast broadband access for small firms has been well documented. In July, freelancer association IPSE released research stating that a majority of rural companies are left with slower broadband access than those in urban areas – despite twice as many micro businesses operating in rural areas.

Dave Millet, a telecoms advisor at Equinox, has claimed that the proposed restructuring “does not go far enough” as BT will effectively remain the key investor into Openreach. If BT still appoints the board, Millet suggested that Openreach will remain unaccountable to the public. 

Millet continued by stating that Ofcom’s proposals would not meet its target of sufficient broadband speed to meet consumer needs in every region. 

“This is against a backdrop of the UK lagging Europe in terms of availability of fibre to the home, the fact that many small businesses have no access to fast broadband and from our own experience many rural areas have effectively no broadband whatsoever,” he said in a statement.

Business broadband: The options out there and how to improve connectivity in rural locations

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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