LONDON (Alliance News) - Sky PLC Chief Executive Officer Jeremy Darroch Thursday again called on Ofcom to address rival BT Group PLC's ownership of key infrastructure over which rivals must run their telephone and broadband services, after the UK regulator said it undertake a wide-ranging strategic review of digital communications in the UK.
BT is the former state monopoly that controlled the entire UK's telephone network and was the country's only provider of services. BT was forced to carve infrastructure unit Openreach out of its business by Ofcom in 2006, as part of measures allowing rival operators access to BT's network.
Openreach manages and maintains BT's network, and whilst BT has had to ring-fence the division and it is heavily regulated by Ofcom, rival services providers say it is not fair that BT can run telephone and broadband services and control the infrastructure.
Ofcom said Thursday its second review of the wider market - its first review ran between 2003 and 2005 - will be looking at competition, investment, innovation and availability of products in the broadband, mobile and landline markets.
Ofcom said the new review will consider a range of issues, with a focus on ensuring the right incentives for private-sector investment, maintaining strong competition and taking on obstacles that might be "holding the sector back", and assessing the possibility of deregulation in some areas.
The first phase of the review will look at current and future market factors that might affect the sector and its current regulatory approaches, and Ofcom will meet with industry, consumer groups, UK government and devolved administrations.
"We have seen huge changes in the phone and broadband markets since our last major review a decade ago. Only five years ago, hardly any of us had used a tablet computer, high-definition streaming or 4G mobile broadband," said Ofcom Acting Chief Executive Steve Unger in a statement.
"The boundaries between landline, mobile and broadband services continue to blur, and people are enjoying faster services on a growing range of devices. Our new review will mean Ofcom's rules continue to meet the needs of consumers and businesses by supporting competition and investment for years to come," Unger added.
Darroch said Sky welcomed Ofcom's new review.
"The sector is vital to the UK's future but there are serious questions about whether the existing structure can deliver the infrastructure, innovation and choice that consumers and businesses need. Structural separation of Openreach, the UK's only nationwide broadband infrastructure, is at the heart of creating a sustainable industry; one that provides the capacity and incentive to invest whilst also harnessing the power of multiple competing retailers to drive higher take up and lower prices for customers," Darroch said in an emailed statement.
"Ofcom must now take the opportunity to address Openreach?s conflict of interest as a subsidiary of BT or risk extending the problems that are affecting the industry and its customers today. We look forward to playing a full part in Ofcom's review," Darroch added.
BT also welcomed the review, saying that it looks "forward to engaging with Ofcom as it updates its rules to take into account the explosion in competition over the past decade."
"Ofcom has helped to create the world's most competitive telecommunications market - one where prices are among the lowest while the speed and availability of superfast services leads Europe's largest economies. Its rules do now need to be simplified and modified given the market has changed out of all recognition," BT said. "The UK needs an updated regime which will promote yet further investment whilst ensuring all companies can compete on an equal footing."
Shares in BT are trading down 1.0% at 441.00 pence Thursday morning. TalkTalk Telecom Group is up 0.04% at 329.33 pence, Sky is up 0.6% at 990.00 pence, and Vodafone Group PLC is up 0.3% at 217.80 pence.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
Vodafone (VOD)
BT (BT.A)