BT Openreach franchise to end

Discworld Gods Wikipedia

After a lengthy period of negotiations over the structure of Openreach, the Government Communications watchdog OfCom has lost patience with BT, and proposes the establishment of an independent company

LWD has followed this story in earlier posts which examined the case for and against such a move. [See Is it Openreach or overreach? and The divestment of Openreach is not a simple case ]

The Plans

This week the Government announced its plans to deal with what it sees as a failure by BT to address its concerns regarding OpenReach. According to Reuters:

Britain’s telecoms regulator will go to the European Commission to try to force BT to legally separate Openreach, the division that supplies broadband to millions of homes and businesses, in a major reform aimed at spurring investment in the country’s ageing network.

The regulator, which despite Britain’s vote to leave the European Union still needs European Commission support to force through change at Openreach, wants BT Openreach to plough more money into upgrading its copper networks to fibre to catch up some European rivals and the likes of South Korea and Japan.

Ofcom’s decision to up the ante follows the failure to reach a voluntary deal after more than a year of talks. It said it was “disappointed” that BT had not done enough to separate Openreach from the rest of the group. It had ordered the former state monopoly to run the network arm as a legally separate company in July [2016].

The Independent suggests that the announcement is only the start of what might be an extended commercial battle. BT rivals Sky and Talk Talk may make some gains, but BT still retains powerful influence through its monopolistic ownership of the landline monopoly in the UK.

In the dispute, BT has not exactly argued their case convincingly. Their CEO in one radio interview was emphatic about the success of their efforts at upgrading broadband services, and dismissed alternatives as too small. The regulator thinks differently.

Amongst the ironies, is the prospect of the EU passing judgement to permit an improvement in an important advanced-technology industry sector in the soon-to-be departing UK after its Brexit vote is converted into a full EU exit.

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