Two years launching its review, Ofcom struck an agreement with BT that will see Ofcom become a legally separate company, with its own budget, board and obligations.
BT’s rivals had called for a complete separation, removing Openreach from BT’s ownership entirely, but Ofcom drew short of what could have been a financial and regulatory nightmare to coordinate, settling instead on the middle group of a legal split.
Those rivals seemed to welcome the decision. Vodafone called it an “encouraging start”. Sky said: “A more independent Openreach is a step towards delivering better service to customers and the investment that the UK needs. It's important that today's agreement is now implemented by BT in good faith and without delay."
TalkTalk CEO Did Harding, due to step down, challenged the regulator and the incumbent to disclose a full timetable for the changes. She said: “We hope this is the start of a new deal for Britain's broadband customers, who will be keen to see a clear timetable from Openreach setting out when their services will improve.”
This, according to Mark Shurmer, managing director of regulatory affairs at Openreach, will happen within months, rather than the years that the process had carried on for.
The new Openreach Limited presents as opportunity for BT’s traditional rivals, as it will see a shake-up of the relationships between the infrastructure arm and its competitors, who are now just customers.
“The UK market is already very competitive,” said Shurmer, “but the enshrinement of a requirement to treat customers equally will ensure that continues going forward. What we have now with a new consultation process is a new approach to developing business cases or future network investment.
“It is possible this will lead to new ways of generating better business cases, which will be good for BT, as a shareholder in Openreach, but also for Openreach itself, and its customers.”
This, perhaps, could mean new co-investment models involving Openreach and its rivals. How this might work is at this time unclear, but the opportunity there was made clear by Shurmer.
“The great thing about the UK market is the extent of competition that there is, with Openreach at the heart of that, providing open access to its network on an equivalent basis,” Shurmer added. “In the UK, if you want to invest in telecoms, you’ve got a whole range of options, from buying wholesale products from Openreach, to building your own network using ducts and poles provides on a regulated basis.
“These new arrangements also allow Openreach to have discussions with customers about potential new or alternative co-investment models. We’re very interested in hearing from customers on thoughts they have about how to bring more investment into the UK infrastructure.”
Releasing information about your network planning to your rivals may sound horrifying on the surface, especially given that the new consultation process only outlines a confidential “phase” and does not clarify how long this lasts for.
GTB asked Shurmer this, and he explained that all discussions will be kept confidential until the communications provider agrees to release this, meaning BT cannot take a look at what their rivals have in the pipeline.
It’s important to note this does not mean the information will be kept confidential forever. If Openreach invests in new infrastructure, it has to be made available on an equivalent basis to everyone. But it is the customer who will determine when this is disclosed.
This in itself could transform the UK market. A number of providers, such as Virgin Media, are already expanding their fibre footprint. If operators can develop a co-investment model that both supports their own interests but also reduces the huge financial burden of deploying fibre, then the UK’s goal to offer everyone superfast broadband – 95% is the goal for the end of 2017 – could become a reality.
