BT to be forced to open up network infrastructure to rivals

BT will, however, not be obliged to sell its stake in its Openreach division under the regulator's plans, as many of its rivals had called for. Ofcom said, though, that it intends to "reform Openreach’s governance and strengthen its independence from BT".

Openreach is BT's network infrastructure division. It provides services to BT as well as other telecoms operators in the market. Ofcom had said in July last year that it was considering requiring BT to sell off Openreach as part of its ten-year strategic review of digital communications in the UK. Ofcom has now published its initial conclusions from that review (112-page / 1.34MB PDF).

"In future, Openreach should be governed at arm’s length from BT Group, with greater independence in taking its own decisions on budget, investment and strategy," Ofcom said. "Openreach management will be required to serve all wholesale customers equally, and consult them on its investment plans. Greater independence could be achieved by ‘ringfencing’ Openreach (for example, Openreach becoming a wholly owned subsidiary with its own purpose and board members). Full ‘structural’ separation remains an option."

Telecoms expert Reg Dhanjal of Pinsent Masons, the law firm behind Out-Law.com, said: "Although BT has avoided full structural separation from Openreach, Ofcom has left its options open as it has made clear that full separation is still on the table if functional separation cannot be strengthened. Ofcom is currently developing its proposals regarding functional separation and the actual detail will be contained in those proposals."

Ofcom said that it wants to encourage more investment in fibre networks so as to reduce "the country’s reliance on Openreach". As part of that initiative Ofcom said it will require BT to let rival companies install competing networks via BT's existing infrastructure.

"BT will be required to open up its network, allowing easier access for rivals to lay their own fibre cables along BT’s telegraph poles and in its underground cable ‘ducts’," Ofcom said.

Ofcom said it also plans to publish "service quality performance data" from all network operators and ensure that consumers and businesses are automatically compensated "when things go wrong". Openreach will face "tougher minimum standards" and rigorous enforcement and fines for underperformance", it said.

Home owners and small businesses will also gain a new right to have access to broadband services, Ofcom said. Broadband providers will be subject to a new universal service obligation (USO) that will require them to provide access to broadband services of at least 10Mbit/s initially, although the minimum speeds to be provided under the new USO will rise over time, the regulator said.

Under the proposals, mobile operators that win the right to use spectrum in future could also be subject to licensing conditions that require them to extend the coverage of their wireless broadband services into rural areas, Ofcom said.

"The 700 MHz spectrum band, is particularly well suited to providing better coverage," Ofcom said. "The 700 MHz band will be available for mobile use by the end of 2021 and potentially up to two years earlier. We expect to auction mobile licences for the band in late 2018 or 2019."

Ofcom also said that it will move to deregulate in the telecoms sector when it can whilst ensuring consumers have appropriate protection.

"We will step back from regulation where people and businesses no longer need it, including when there is a real prospect of competition," Ofcom said. "Our ultimate goal is to improve communications services for everyone, not to increase regulation."