Broadband providers send Ofcom suggestions on changing Openreach

The Federation of Communication Services has sent an open letter to Ofcom CEO Sharon White with 10 points on revamping Openreach’s governance

The Federation of Communication Services (FCS), whose members include Sky, TalkTalk and Vodafone, have sent an open letter to telco regulator Ofcom on why Openreach needs to become a separate company.

In February 2016, Ofcom published the initial findings of its Strategic Review of Digital Communications, first announced in 2015. The telcom regulator said Openreach would be forced to open up its network of poles and underground tunnels to let rivals build their own fibre networks.

Responding to this review, Ofcom CEO Sharon White stated: “We agree with Ofcom’s conclusion that the status quo cannot be allowed to continue over the next 10 years, given the critical importance of the UK’s digital communications infrastructure.

“The national network has to be able to deliver the world class connectivity that Britain needs, enabling a dynamic market where all industry players can invest and compete on a level playing field.

“We also agree with the UK Government when it stated that ‘the current relationship between BT and Openreach will not deliver the country’s needs for more competition, better innovation and better service’, and note that it urged Ofcom to take “whatever action is needed” to achieve this.”

In the open letter to Ofcom, FCS presented a 10 point strategy outlining its suggestions on how Openreach could be run independently of BT Group.

“Openreach’s directors need to be confident that they can deliver network access reliably and consistently to fulfil its purpose,” said FCS.

According to FCS, Openreach needs to control network assets, including the copper, fibre, poles and ducts that make up its network, along with the systems and support functions needed to keep the business running.

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It asked Ofcom to consider enabling Openreach to own these assets and functions itself, and employ its workforce directly.

“It will no longer share infrastructure or personnel with BT Group. Instead, it will have its own finance, legal, strategy, product design and system teams that operate entirely independently of BT Group,” the FCS letter stated.

CEO of FCS Chris Pateman said: “I hope the letter will give us focus to find ways to rethink Openreach services without separating it from BT. I want it to be the basis of a discussion going forward.”

Commenting on the suggestions that Openreach should own its network assets, he said: “If you are a customer dealing with a supplier, you want to to make sure that the supplier owns the assets. If Openreach is to be a serious business, it has to be able to make serious business decisions.”

Pateman believes the only way this can be achieved at Openreach is if it owns the network assets.

Writing recently on Computer Weekly, Frances Murphy and Joanna Christoforou of law firm Morgan Lewis warned that there is no guarantee that opening up Openreach’s network would, in itself, increase competition.

“It would require competitors to make very material investments to build their own fibre networks, which they may be unwilling or unable to do. There is also a non-excludable risk that the costs may be passed on to consumers through higher retail prices or lower-quality goods or services,” they noted.

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