BT faces stricter regulatory regime but dodges enforced Openreach break-up

Telecommunications provider BT is bracing itself for a stricter regulatory environment going forward after coming under pressure from rivals to open up its Openreach broadband infrastructure to greater competition.

In a review of the present state of play Ofcom decided against an enforced break-up of the business but has instead told it to ensure greater independence for the division, although it will withhold the right to instigate a future break-up further down the line ‘if necessary’.

BT has also been ordered to allow rivals to build their own fibre broadband networks using itrs network of telephone poles and ducts.

Responding to the announcement BT said: “Customer expectations have increased dramatically in recent years and we are keen to work with Ofcom and industry to meet those expectations. We all want to improve service. Openreach is already subject to regulated service standards and we are happy to work with Ofcom to improve them.

“Our proposal includes a new governance structure for Openreach as well a clear commitment on investment. Openreach is already one of the most heavily regulated businesses in the world but we have volunteered to accept tighter regulation to bring matters to a clear and speedy conclusion.”

A Sky spokesperson added: “‘We welcome Ofcom’s recognition that the current Openreach model is not working and that fundamental change is required. BT must now be held to account for improving service and enabling delivery of fibre to Britain’s homes and businesses.”

Paolo Pescatore, director, multiplay and media at CCS Insight, said: “… All providers will now be claiming victory. BT's rivals have mounted enough pressure to raise concerns about how competing companies gain access to a shared infrastructure, and BT has acknowledged some of its shortcomings and has pledged to address them.

"Overall, Ofcom has called for reform but no separation for Openreach. Rivals will be delighted that Ofcom is calling for more independence of Openreach from BT with on overhaul of its governance, but will require EU approval which is no easy feat.”

Ofcom is seeking to lower costs for consumers by engendering increased competition within the telecoms sector, still dominated by BT through its fixed line network.

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