BT could be forced to sell Openreach, says Ofcom

BT’s rivals have wanted Openreach to be split off from the former state-owned business

Simon Neville
Wednesday 02 December 2015 02:03
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Ofcom chief Sharon White says the UK’s broadband provision market has to change
Ofcom chief Sharon White says the UK’s broadband provision market has to change

The head of regulator Ofcom has suggested that BT could be forced to sell off its Openreach business, to the delight of its rivals who claim the wholesale service, which supplies nearly every household, could be uncompetitive. The regulator’s chief executive said she was looking at four options for the future of the broadband providing service, warning that keeping the status quo was “unlikely”.

BT’s rivals have wanted Openreach to be split off from the former state-owned business as a condition of its £12.5bn mega-merger with mobile phone operator EE.

However, an investigation by the Competition and Markets Authority said it was not a competition issue but a matter for Ofcom. Chief executive of Ofcom, Sharon White, told the BBC one option was “the structural separation” of Opeanreach from BT, although this was one of four possible options being weighed up.

The other options are maintaining the current arrangement, more deregulation, structural separation, or adjusting the current system. Openreach is run at arm’s length by BT, providing and maintaining the infrastructure for the UK’s broadband network while the different operators lease the lines that lead into homes.

BT has said previously that it is the only company with enough scale to maintain the country-wide infrastructure, but rivals have claimed the company could either increase prices unilaterally or offer customers to its own service faster speeds, although this is protected by regulations.

The company has already been censured by Ofcom over the EE merger, which was approved in October, when it was revealed £1.7m of Openreach’s revenues was used to fund the deal.

BT has also been criticised for not rolling out superfast broadband quickly enough, with 2.5m homes in the UK still without minimum broadband speeds of 10 megabits per second.

Ms White said: “I think there will be change… We’re looking at a number of options, but I think it is very unlikely we will conclude that the status quo, which has worked over the last 10 years, is where we are likely to be over the next decade.”

Earlier this month Vitorio Colao, the chief executive of Vodafone, said: “Openreach is clearly not working to help competition or choice.”

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