Tuesday 24 May 2016 4:45 am

Reform Openreach’s relationship with BT or public anger at the UK broadband market will only rise

Anyone who read the papers last week might be forgiven for thinking that Britain’s broadband troubles are over. After years of rising anger about poor reliability, speed and coverage, a new piece of legislation is on the way, aiming to deliver universal coverage.

Unfortunately, this is not a panacea and, while the recently announced Digital Economy Bill is a step in the right direction, the government’s efforts will be seriously undermined unless the regulator has the courage to take bold action on the future of the national telecoms network, Openreach.

You don’t need to be a telecoms expert to know the market is not working. Even Ofcom has acknowledged the problem, with its recent strategic market review conceding that the status quo is unacceptable.


Along with a large coalition of stakeholders across industry, Parliament and the third sector, TalkTalk believes the most effective solution is to structurally separate Openreach from BT. This would drive a step change in investment, innovation, speed and quality of service.

However, although the regulator hasn’t ruled this option out, BT’s threats of legal action and withdrawn investment have given it pause for thought. So while we hold firm to our belief that the fastest, simplest solution remains a fully separate Openreach, in the interests of the whole country, I believe we must consider what the absolute minimum required to deliver meaningful change would look like.

Read more: TalkTalk accuses Ofcom of dodging BT decision

That’s why, last week, we joined forces with a cross-section of industry voices (including Sky, Vodafone and many independent providers) to set out a 10 point plan for reform. This framework would allow BT to keep Openreach but would also result in a step change for UK connectivity. This means reforming Openreach’s governance to reflect well-established principles (which should apply to any large business but somehow do not here); ensuring that it has the tools it needs to deliver a world-class infrastructure network; and guaranteeing that Openreach delivers for all of its customers on an equal basis.

Most importantly, Openreach must be established as a legally separate company. It must have its own board, able to act truly independently and make investment decisions that are right for the country, rather than just BT Group.

Equally, Openreach should own and control its own assets, employ its own staff, and take responsibility for its relationship with external stakeholders – including the regulator. It should also, rather obviously, have control of its own budget. Despite its claims of “functional separation”, BT currently has authority over all of this.

Finally, Openreach’s relationships with its customers and suppliers should be carried out on an equal, open and transparent basis. Any service or information made available to one customer must be made available to all.


Read more: Openreach: Has Ofcom done enough to ensure competition?

If implemented, the plan would create a reformed Openreach capable of delivering better quality services and faster, more reliable speeds for all its customers. It is straightforward to execute, using well-established principles from across the corporate world. Ultimately, levelling the playing field will transform the market, allowing innovation to flourish and encouraging investment.

Having acknowledged the problems facing the industry, Ofcom now has a big decision to make. It is highly concerning that so far the regulator’s deliberations have taken place solely in behind-closed-doors negotiations with BT, which is reportedly proving immovable even on the issue of a legal separation, let alone a structural one.

But Britain’s digital future is too important to be decided in a back room deal between just two parties: it’s vital that consumers and businesses are heard too. The rest of the industry is prepared to debate the options in public, working toward a compromise that would create a market structure that benefits the whole country, not just one company. It’s time the regulator and the incumbent came out in the open and joined us.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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