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'BT remains a monopoly provider' - telecoms industry reacts to Ofcom report

Thursday, February 25th 2016 by Phil Wilkinson-Jones

Ofcom’s failure to split Openreach from BT could leave the UK with another decade of “debate and delays”, TalkTalk’s CEO has claimed.

Dido Harding, reacting to Ofcom’s initial conclusions following its Strategic Review of Digital Communications, said the regulator had recognised that BT’s control of Openreach “creates a fundamental conflict of interest which hurts customers”.

“But having accepted all this, Ofcom has produced 100 pages of consultation with little concrete action behind it,” she said.

“The risk is that we end up with 10 more years of debate and delays, rather than facing into the problems and delivering improvements for frustrated customers now.”

Ofcom’s report stopped short of splitting Openreach from BT, instead recommending that Openreach’s network of telegraph poles and underground tunnels is opened up so its rivals can build their own fibre networks.

Vodafone said it has used similar existing infrastructure in other countries such as Portugal to roll out fibre to the premises (FTTP) broadband.

"However, BT still remains a monopoly provider with a regulated business running at a 28% profit margin," said a spokesperson.

"Therefore, we urge Ofcom to ensure BT reinvests the £4bn in excess profits Openreach has generated over the last decade in bringing fibre to millions of premises across the country, and not just make half-promises to spend an unsubstantiated amount on more old copper cable: we agree with Ofcom that fibre is the future."

'Staging post'

A Sky spokesperson said BT must now be held to account for improving service and enabling the rollout of fibre broadband to Britain’s homes and businesses.

“Ofcom's actions today are not the end of the debate but a staging post towards delivering the network and service that Britain needs,” said the provider in a statement.

“We believe the simplest and most effective way to fix the current broken market structure is for Openreach to be completely independent. We are pleased to see that separation is still on the table.”

The Independent Networks Cooperative Association (INCA), said it was disappointed Ofcom had not referred the matter to the Competitions and Markets Authority.

INCA's CEO Malcolm Corbett said: “We are disappointed that Ofcom hasn't gone further to challenge the control BT exercises over the communications market, but pleased that [Ofcom CEO] Sharon White and her team have recognised the need for significant changes.”

Mr Corbett said INCA’s members, which include Vodafone, Sky and CityFibre, have struggled to make sense of the rules surrounding access to BT’s ducts and poles.

“A few stout-hearted companies are having a go – notably Warwicknet, Callflow Solutions and Hyperoptic – so steps to make it easier for competitors to use the existing infrastructure are welcome.

“It means faster deployment of the high speed, affordable broadband services that consumers and businesses need."

Gigabit broadband provider Gigaclear said the fate of Openreach will not affect its rollout plans.

CEO Matthew Hare said: “Gigaclear continues to invest in building new FTTP networks and, regardless of whether Openreach stays within the BT Group, intends to bring Gigabit Internet to tens of thousands more rural homes and businesses this year.

“The support for a stable investment climate will help us reach hundreds of thousands in the years ahead.”

CityFibre CEO Greg Mesch said: “The conclusions in today’s report will considerably strengthen CityFibre’s capability to drive forward an alternative fibre future for Britain.”

Tom Mockridge, CEO of Virgin Media, said the best way to provide competition against BT and its "inherited advantages" is to support infrastructure investors.

"We are challenging the incumbent with £3bn of investment in new network and providing choice. Ofcom has done the right thing by resisting separating Openreach, which would have sent a negative signal to infrastructure investors."

ISPA, the Internet Service Providers' Association, said it is pleased with Ofcom's "ambitious vision" and its proposals on how the UK connectivity needs can be transformed over the next decade.

It said in a statement: "With ISPA members investing heavily in their networks across the country – locally and nationally utilising a range of technologies – ISPA supports the report’s objectives to improve performance, enhance competition and investment and make rolling out networks easier in this data-driven age."

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