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Technology / Hardware

BT Openreach broadband Ofcom report: How big UK rivals Sky, Virgin, TalkTalk reactions compare

The conclusions of Ofcom’s Digital Communications Review are in, and nobody is exactly ecstatic.

Most media attention on the review had focused on whether Ofcom would force Openreach, the only truly national fixed infrastructure provider, to be split off from the BT Group. In Ofcom’s last review ten years ago, it chose to split Openreach into a separate division within BT.

The review concluded that Openreach did have a conflict of interest and was not necessarily acting in the best interests of customers.

However, Ofcom plans to deal with this through regulatory changes. Openreach will be compelled to open its ducts to allow competitors to install fibre. It will also have its governance structure overhauled to increase its independence from BT.

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There will also be new minimum requirements for its services.

So how have the industry and others reacted to these measures? Certainly from BT, which had the least to gain and the most to lose from an assessment of the Openreach situation, there is a palpable sigh of relief.

Most of BT’s rivals, which have been vocally demanding a split, have applauded the spirit of Ofcom’s conclusions but sought to portray them as a work in progress rather than the finished article.

From the political wings, there are more unequivocal condemnations.

It is worth noting that Ofcom cannot directly force BT to split off Openreach. Both parties will want to achieve a voluntary agreement to avoid a costly and time-consuming referral to the Competition and Markets Authority (CMA).

CBR rounds up the major reactions to Ofcom’s review. Notable absences are the Conservative Party, which did not issue a formal statement.

 

 

1. BT

Gavin Patterson, BT CEO, took the opportunity to trumpet the UK’s record on broadband so far, saying it is ahead of peers and that BT was willing to make the investment required to maintain this position.

Patterson rather predictably praised Ofcom for deciding not to break up BT, and said that his company would be willing to work with Ofcom and industry to achieve a "strengthened but proportionate form of the current model."

He added that BT had already put forward a proposal as the basis for discussion. This would include a new governance structure for Openreach and a clear commitment to investing in the provider.

Patterson also said that "a great deal of what Ofcom is proposing is already in place", highlighting that apparently "ducts and poles have been open to competitors since 2009 but there has been little very interest to date."

"A voluntary, binding settlement is in everyone’s interests and we will work hard to ensure one is reached," he said in conclusion.

 

2. Sky

As the second largest broadband provider in the UK but one without the same infrastructure backbone as BT, Sky had a vested interest in Openreach being split off from BT.

A Sky spokesperson welcomed Ofcom’s acceptance that "the current Openreach model is not working and that fundamental change is required."

While Sky offered muted support for the proposals, it said that this was not the "end of the debate but a staging post" in the drive to produce a better network in the UK.

It would not be abandoning its calls for a full separation of Openreach, which it claimed would be the "simplest and most effective way to fix the current broken market structure."

 

3. Virgin Media

Alone of BT’s major rivals, Virgin Media has not called for a split of Openreach from the BT Group.

This is because Virgin Media is also a notable owner of infrastructure in the UK, although on nowhere near the same scale as Openreach. It is investing £3 billion in expanding its network, an advantage over Sky and TalkTalk which would be lessened in the event of an Openreach split.

Accordingly, CEO Tom Mockridge says that "Ofcom has done the right thing by resisting separating Openreach, which would have sent a negative signal to infrastructure investors."

Mockridge maintains that the best way to provide competition is to support infrastructure investors.

 

4. TalkTalk

TalkTalk, which also supplies consumers with broadband through Openreach, has taken a similar line as Sky in calling for a full separation of Openreach from the BT Group.

In a statement from Dido Harding, the company followed Sky in praising Ofcom for recognising the "fundamental conflict of interest which hurts customers."

However, the provider was more damning of the report than Sky, claiming that Ofcom had produced "100 pages of consultation with little concrete action behind it."

Harding urged Ofcom to deal with the problems in the market now rather than allowing "10 more years of debate and delays".

 

5. High-speed providers

Hyperoptic, Gigaclear and CityFibre, all of which provide high-speed fibre connectivity, broadly praised the review.

Hyperoptic’s MD and co-founder Dana Tobak did not comment on the decision not to separate Openreach, but praised the review for opening up Openreach’s duct and pole network.

She said the company would "reliably, and affordably, offer [its] market leading 1Gb service to even more consumers." She also said that Ofcom had to ensure that all customers of Openreach were involved in decision-making, not just resellers such as Sky or TalkTalk.

Gigaclear’s CEO Matthew Hare welcomed the conclusions’ focus on quality and performance but said that Gigaclear’s business would continue as usual.

Greg Mesch, CityFibre CEO, also welcomed the recommendations and said that they would "considerably strengthen CityFibre’s capability to drive forward an alternative fibre future for Britain."

 

6. The Labour Party

Although it has previously been official Labour Party policy (as of August when Chris Bryant was Shadow Secretary for Culture, Media and Sport) to demand an Openreach split, it is not clear if this is still the case under Jeremy Corbyn.

Maria Eagle MP, now in Bryant’s former position, did not join Farron in criticising the decision not to split Openreach.

However, she agreed that "BT Openreach must be much more responsive to consumers, far too many of whom are fed up over a lack of access to broadband and poor quality."

Eagle criticised the Government for getting it "badly" wrong on failing to create healthy competition in the digital market and criticised the "far too slow" rollout of broadband.

 

7. The Liberal Democrats

The Lib Dems have been firm proponents of splitting off Openreach from the BT Group, and on Twitter leader Tim Farron MP was harshly critical of the results of the review.

He wrote that Ofcom had "bottled it" and that they should have called for a full split of the two companies.

Farron criticised the current situation of an "unacceptable and unaccountable virtual monopoly", highlighting public sector provision as a particularly ailing area.

He added that his party would continue to "push for" a split and that he wanted to back solutions such as B4RN, a community-led initiative to bring broadband to the rural north of England.

 

8. British Infrastructure Group (BIG)

The British Infrastructure Group, led by the Conservatives’ Grant Shapps, made headlines in January when it released a report lobbying for a split.

The cross-party group includes MPs from the Conservatives, Labour, the Liberal Democrats and UKIP.

Shapps tweeted that the BIG was "doubtful" that Ofcom telling BT to open up the cable network would be enough.

He added in a separate tweet that almost no-one was getting their advertised broadband speeds and that this was "more of a scandal than VW emissions or ppi."
This article is from the CBROnline archive: some formatting and images may not be present.