Ofcom has today announced detailed plans to make digital communications work for everyone - including major reform of Openreach, the network division of BT.
In February, Ofcom outlined measures to help make the UK a world-leading digital economy over the next ten years and beyond, by delivering a step-change in telecoms services for everyone.
These plans focused on a more independent Openreach; greater choice of broadband networks, including fibre connections to homes and offices; better quality of service across the whole industry; and better broadband and mobile coverage for people and businesses.
Ofcom has today announced progress in these areas.
Openreach is the part of BT Group that develops and maintains the UK’s main telecoms network used by telephone and broadband providers such as Sky, TalkTalk, Vodafone and BT Consumer. Openreach has obligations to offer the same products to all customers on the same terms.
Ofcom introduced this structure in 2005, and it has delivered benefits such as stronger competition. However, BT retains influence over significant Openreach decisions. BT has an incentive to make these decisions in the interests of its own retail businesses, rather than BT’s competitors, which can lead to competition problems.
In February, Ofcom said that Openreach must become more independent from BT, and has today proposed how this should work.
Ofcom’s proposed model, announced today, is for:
This model would provide Openreach with the greatest degree of independence from BT Group that is possible without incurring the costs and disruption - to industry and consumers - associated with separating the companies entirely.
It is designed to ensure that Openreach acts more independently from BT Group, and takes decisions for the good of the wider telecoms industry and its customers. If it cannot achieve this, Ofcom will reconsider whether BT and Openreach should be split into two entirely separate companies, under different ownership.
We are seeking views on the plans outlined today by 4 October.
BT has notified plans to Ofcom to deliver changes to Openreach’s governance, to make it more independent and accountable to its customers. We welcome BT’s acknowledgement of the need to reform Openreach, and elements of BT’s proposal. However, there remain important areas where it does not fully address our concerns. For example, the need for Openreach to be a legally separate company, and for Openreach to have confidential discussions with its customers without oversight by BT.
In February, Ofcom committed to make it easier for telecoms providers to invest in advanced, competing infrastructure by improving access to Openreach’s network of telegraph poles and its ‘ducts’ - the underground tunnels that carry telecoms cables.
This would make it possible for competitors to connect their own fibre optic cables directly to homes and businesses, delivering more choice for people and businesses over the next decade, while reducing the UK’s reliance on the Openreach network.
The plans include making Openreach provide an online database showing the physical location and characteristics of its ducts and poles - a ‘digital map’ of the UK. Last week, the company demonstrated how this will work.
BT has already started trials of new, simpler processes for sharing its network, working with five other telecoms companies. Ofcom welcomes this progress, and will set out further detail on improved duct and pole access in the autumn.
On Sunday (31 July), new rules1 come into force that will give telecoms providers further rights to access physical infrastructure. These measures are designed to reduce the cost of deploying broadband networks, by sharing access to infrastructure across different sectors.
A number of companies are continuing to roll out ultrafast fibre networks. Virgin Media is investing £3bn to extend its network across the UK. CityFibre, Sky and TalkTalk are connecting fibre to premises in York, and KCom is doing so in the Hull area. Other providers, such as Hyperoptic and Gigaclear, are bringing ultrafast broadband to local areas.
In February, Ofcom also announced a range of measures designed to ensure that all phone and broadband companies provide service quality that customers expect.
Since then, Ofcom has taken significant steps to improve services, as well as boosting coverage - including:
In the coming months, Ofcom will carry out further work on:
Sharon White, Ofcom Chief Executive, said: “We’re pressing ahead with the biggest shake-up of telecoms in a decade, to make sure the market is delivering the best possible services for people and business across the UK.”
NOTES TO EDITORS
1. These rules are the Communications (Access to Infrastructure) Regulations 2016.