LONDON (Alliance News) - UK telecoms regulator Ofcom on Thursday said BT Group PLC's Openreach division must be reformed to better serve customers and businesses, and that BT "must open up" its network.
Although the regulator has not enforced a structural separation of the division, it said that "if necessary", it reserves the right to require BT to spin off Openreach as an entirely separate legal entity with its own shareholders, as part of plans to reform Openreach's governance.
The comments were made as part of Ofcom's initial findings from its extensive review of the UK digital communications market, and said that it is announcing a new strategy to promote the large-scale rollout 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.
Supporting investment by rival providers will reduce the country's reliance on Openreach, which installs and upkeeps much of the UK's broadband connections at present, and increase competitive pressure on its network, Ofcom said.
Openreach will be required to open up its telegraph poles and 'ducts' - meaning the underground tunnels that carry telecoms lines - to allow rival providers to build their own fibre networks. Additionally, Openreach must make it easier for competitors to access the network, and provide "comprehensive data" on the nature and location of ducts and poles.
The regulator said that Openreach has delivered benefits such as stronger competition in its current form as part of BT, but evidence from its review showed Openreach "still has an incentive to make decisions in the interests of BT, rather than BT's competitors, which can lead to competition problems."
In particular, Ofcom noted that Openreach's governance "lacks independence from BT Group', and has thus said that it is necessary to overhaul Openreach's governance and strengthen its independent from BT. Ofcom will prepare detailed proposals later in the year to make these changes, but said that a new model might require Openreach to become a ring-fenced 'wholly-owned' subsidiary of BT, with its own purpose and board members.
"People across the UK today need affordable, reliable phone and broadband services. Coverage and quality are improving, but not fast enough to meet the growing expectations of consumers and businesses," said Chief Executive of Ofcom Sharon White in a statement.
"So today we've announced fundamental reform of the telecoms market - more competition, a new structure for Openreach, tougher performance targets, and a range of measures to boost service quality. Together, this means a better deal for telecoms users, which will improve the services and networks that underpin how we live and work," White added.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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