Ofcom is going to Europe to order BT to split off Openreach, which runs the UK's infrastructure.
Telecoms watchdog Ofcom is set to order BT to split off its broadband infrastructure business Openreach.
Openreach is the part of BT that runs the back end of the UK's telecoms network. It's used by providers such as Sky, TalkTalk and Vodafone -- who complain that they must rely on infrastructure maintained and developed by their rival, BT. Ofcom says BT has failed to meet demands to make Openreach more independent, and so the the regulator is now going to the European Commission.
Ofcom announced today it intends to force the legal separation of Openreach from BT. The regulator acknowledged the cost of creating two separate companies, however, and remains open to suggestions from BT on making Openreach more independent without requiring complete separation.
Mark Skilton, a Professor of Practice at Warwick Business School, believes that more competition could be crucial to speeding up the arrival of new technologies such as the internet of things, superfast broadband and 5G. "The telecoms network has to be the network of the future and this needs big investment from many parties, not just the preserve of one," Skilton said.
"Separating the BT and Openreach monopoly will in my view help this move towards a faster network of providers," Skilton said. "With Ofcom and government leadership now so critical in the Brexit era in which we find ourselves, we need to think faster and more nationally -- and internationally -- in how we connect to the wider world."
Andrew Ferguson, editor of thinkbroadband.com, believes that Ofcom will need to watch closely to ensure the new Openreach is not unduly influenced by BT, which will remain its largest customer. "Those with poor broadband may think that today's news is an early Christmas present ," he said of customers, "but we would caution that it is too early to celebrate. The downside of more staff and better customer service may be higher costs, so to deliver on what many expect may mean price rises for all of us."
Faster fibre connections are unlikely to roll out any sooner, according to Ferguson. But he expects to see things heat up in areas where Openreach competes with other companies such as Virgin Media building their own infrastructure, allowing Openreach customers like Sky and TalkTalk to take on Virgin too. "It's going to be exciting to see how things change, or whether they change at all," he said.
Some believe there's more work to be done, however, especially in poorly served rural areas. "The infrastructure problems facing the UK market that prevent the rollout of a nationwide next-generation broadband network still remain," said Jaime Fink, co-founder at Mimosa Networks. Mimosa is a US broadband company that works with smaller UK networks such as Boundless Networks, which operates across Yorkshire and Lancashire, and Village Networks in Buckinghamshire.
"The DSL (cable) foundations that underpin much of the UK's broadband network simply do not offer the bandwidth and reliability to support today's internet applications and meet the demands of tomorrow's increasingly data rich services," said Fink, who points out that the digging and disruption required to shift to fibre is a problem in both rural and densely populated areas.
"Openreach and other UK service providers must change their approach and look at new technologies," he argued. "Lessons can be taken from the US, where new broadband market entrants such as Google and Facebook are turning to fibre alternatives."