Ofcom Strategic Review and the separation of Openreach from BT
Ofcom Strategic Review – the boys don’t want to see a separate Openreach
The Ofcom Strategic Review happens every 10 years, the last being in September 2005. This week Ofcom announced the consultation for its latest review with a wide range of subjects on the table around the general subject categories of
- investment and innovation, delivering widespread availability of services;
- sustainable competition, delivering choice, quality and affordable prices;
- empowered consumers, able to take advantage of competitive markets; and
- targeted regulation where necessary, deregulation elsewhere.
The 2005 review led to the formation of Openreach. The 2015 review includes in the “sustainable competition” section a discussion as to whether Openreach needs to be totally separated from BT. Cast off and left to row its own canoe.
There has recently been a flurry of complaints to Ofcom about Openreach, notably from Sky and TalkTalk. We discussed this at the ITSPA council meeting yesterday and then afterwards at the Summer Forum. The tone of the conversation was that yes there was a problem with Openreach – the number of engineering visit no shows costs the service provider industry a fortune – but no they didn’t see the benefit in separating Openreach from BT.
People would rather Openreach just got its act together and stopped failing the industry with its poor performance. See my own experiences here. The feeling was that the process of separating the Openreach would take years, during which time there would be huge disruption and little or no investment in the infrastructure.
This is a complicated subject on which I’m sure many readers will have their own specific views. I’m beginning to veer away from the idea that separating the two is a good thing. The biggest issue for me is the Openreach cost structure. There doesn’t seem to me to be much incentive for them to reduce their costs. On the other hand Openreach does have a complex bag of worms to manage – the archaic UK copper phone line infrastructure.
Technically the easiest/best thing to do would be to replace the copper with fibre. In the long run it would be by far the best thing. The problem is of course how to fund that. BT certainly isn’t going to do it.
The Ofcom discussion document is 185 pages – read it here. It’s a full time job reading this kind of stuff. You have until October 8th to respond.