Digital Britain needs better broadband - are BT and rivals willing to share Openreach?

Telecoms regulator Ofcom has formally put the future of BT’s Openreach subsidiary into play – and hence the future structure of the UK’s critically important broadband infrastructure.

Over the coming months, you can expect to see some robust opinions from broadband providers such as TalkTalk and Sky, as well as smaller rural networks, about why BT’s network infrastructure should be fully split away from the telecom giant’s ownership.

Expect also to see an equally robust defence from BT about why retaining Openreach is the best option – but also some compromises on BT’s behalf to address the justified concerns about what Ofcom called BT’s “incentive to discriminate” against competitors.

I’ve written in this blog before that separating Openreach from BT is the right thing to do. I’ve also speculated that BT secretly wants this to happen, knowing the immense investment that will inevitably one day be needed to replace most, if not all, of the copper national network with fibre.

By creating Openreach 10 years ago, Ofcom helped to establish the most competitive broadband market in Europe at a consumer level – at least, for consumers in reach of BT’s network. The move has stimulated demand and turned broadband into a utility – a must-have for most households and small businesses. BT points out that, by the time its superfast broadband roll-out has completed, high-speed connectivity will be available to more households in the UK than the gas network. But we need to make changes at a wholesale level too, to make the next step.

BT will continue to get as much performance out of its copper network as it can – but inevitably, at some point in the future, the UK needs fibre. Copper can be pushed further, that asset can be sweated for all it’s worth, but a world-leading digital economy is going to need the capacity that only fibre can offer.

TalkTalk and Sky are happy to criticise Openreach and campaign against the status quo, but perhaps the big question they need to be asked is how willing are they to put their money behind their anti-BT rhetoric.

The Openreach network is a national asset – among the most critical of our critical national infrastructure. It will never come into public ownership and never again should. But it should be owned by the industry, with shared risk and shared investment.

BT’s rivals ought to propose a new ownership structure for Openreach. BT deserves to be compensated for its stewardship, and if the likes of TalkTalk and Sky are serious, they should put up the cash to do so. Shares in Openreach could be sold to BT’s major rivals – for example, TalkTalk could own a proportion of the company corresponding to its market share.

A shared network, with shared investment and shared profits, is fair to all players, fair to BT which as market leader would still be the largest shareholder, and fair to rural broadband firms which can take a small share and be protected by stock market rules that prevent discrimination against minority shareholders.

It would be a hugely progressive statement from BT if it were to propose such a solution. It would be the acid test test of BT’s rivals if they were willing to stump up the cash. The future of the UK’s digital infrastructure is at stake, and the big players need to find innovative ways to secure it.