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ShareOfcom on Openreach – yet another missed opportunity

BT must have breathed a sigh of relief this morning when it was confirmed that Openreach would not be split off from the Group as a result of Ofcom’s once-in-a-decade strategic review. Other industry players, Entanet included, are not quite so thankful.

While we welcome Ofcom’s recognition that Openreach requires reform in order to improve services across the industry on behalf of British consumers, ultimately we believe that the regulator has wasted this opportunity to effect real change. The crux of the issue for us has always been that, with its effective monopoly, Openreach has been allowed to fall into a stupor of delivering poor service to both industry competitors; who are forced to use it in delivering the last mile and fault fixes; and customers alike. It has, in effect, been allowed to bring the industry into disrepute.

We understand and appreciate that there are arguments against splitting Openreach from the rest of the BT Group, but the tactics employed by BT in making these arguments have been more about their bottom line than in improving services for all. Threats of legal action, the claim of a pensions “black-hole” that would need to be filled by the taxpayer and delays in the rollout of upgrades to an ultrafast network are all examples of a morally questionable business throwing its toys out of its pram. The announcement of increased funding for network investment just yesterday was, we’re sure, a mere coincidence. Ahem. In truth it feels as though BT is holding both the industry and the country to ransom. Perhaps if the Group hadn’t ploughed close to £1bn into sporting rights in the name of keeping up with the Joneses (Sky), we could all be benefiting from an improved service, better – faster – broadband speeds and a greatly reduced digital divide today.

So how effective do we think Ofcom’s plans will be? The call to open up access to telegraph poles and underground cable ducts to improve competition and subsequently drive service levels up is laudable, as is the commitment to tougher minimum service requirements – we welcome both if they are truly achievable. However, given that Gavin Patterson, BT Group’s Chief Executive, was on Radio 4 this morning trumpeting that the ability for competitors to access infrastructure already exists – at a cost – suggests to us that Ofcom won’t be able to change a thing. And with Dido Harding (TalkTalk chief) claiming that it’s cheaper and simpler to put a brand new telegraph pole up next to BT’s rather than using the incumbent illustrates that conversations over the coming months will be interesting indeed.

And of the service element? Openreach will undoubtedly pay lip service to the report but given the influence that BT has over the business, this is all that it will amount to. Ofcom, being all bark but with a toothless bite, has no real power over BT and will not be able to take control of Openreach. So, when it comes to the regulator and BT, we wonder who’s the dog, who’s the tail and more importantly who’s doing the wagging?

Have your say!

Do you think that Ofcom have missed a trick here or do you think that their hands were tied and they’ve done as much as could reasonably be expected? We’re keen to hear your views so feel free to leave a comment below.

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