Out-Law News 2 min. read
20 Jul 2015, 9:50 am
The proposal is one of a number of prospective regulatory approaches set out in Ofcom's ten-year strategic review of digital communications in the UK, the results of which will inform its regulatory approach over the next decade. Openreach was created as a consequence of Ofcom's last strategic review in 2005, and BT must provide access to its telephone and broadband networks to competitors through the company "on equal terms".
Ofcom said that the current approach had delivered "real choice, quality and value for phone and broadband customers"; but that it was impossible to completely remove the incentive for BT to discriminate against its competitors. In addition, the move from the traditional copper telecoms network to newer fibre optic cables "may require different models of competition", it said.
"In addition, Ofcom has been concerned that Openreach's performance on behalf of providers has too often been poor, requiring the introduction of rules for faster line installations and fault repairs," it said.
"Separating Openreach from BT could deliver competition or wider benefits for end users. It would remove BT's underlying incentive to discriminate against competitors. Separation could also offer ways to simplify existing regulation. However, the process would be challenging and it may not address some concerns relating to Openreach - such as service quality, or the timing and level of investment decisions," Ofcom said.
Other possibilities Ofcom is considering as part of the review include retaining the current model, with regular market reviews to address any competition concerns; strengthening the current model with new price controls or tougher penalties; or deregulating the market entirely. However, it said that 'end to end' competition such as that currently operating between mobile providers, where smaller operators provide both the services and the underlying infrastructure, could lead to "duplication" and "weak competition", it said.
Ofcom is seeking views on these proposals, and on the rest of the review document, until 8 October. It plans to publish a final statement of "priorities and action" by the start of next year, it said.
The review, which began in March, is aimed at ensuring telecoms companies have the incentive to invest in their infrastructure and to innovate. Ofcom is also using the review process to develop its future competition policy and consider whether there are any opportunities for deregulation, it has said.
On investment and innovation, Ofcom said its priority was to promote the commercial development of future ultrafast broadband in order to make it "as widely available as possible". It has estimated that an average speed of 10Mbit/s is necessary in order to benefit from the growth of on-demand video and other online services; however, 15% of UK households cannot currently access these speeds, according to Ofcom. As part of the review, it will set out possible solutions to availability problems, particularly in rural areas; and will consider what further options might be available to improve mobile services.
Ofcom is also keen to explore new ways in which consumers can engage with the market, compare services and shop around in order to benefit from increased competition; building on new rules introduced in June allowing people to switch provider over BT's network by only dealing with their new supplier. It will also consider the implications for the UK of international trends towards consolidation, and the impact on consumers of 'bundling' different media services in a single package, it said.
Sharon White, Ofcom's chief executive, said that the review was aimed at "ensuring people get the best possible communications services, wherever they live and work".
"Our priorities are clear," she said. "We want to promote competition, investment and innovation, so that everyone benefits from even better coverage, choice, price and quality of service in years to come."