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BT rivals slam Ofcom’s Openreach reforms

James Pearce
July 26, 2016

TalkTalk CEO Harding says full separation would be more effective, while Three slams regulator’s “failure to stand up to BT”

A number of industry figures have slammed Ofcom’s decision not to fully split Openreach from BT after the regulator announced its proposals for restructuring the telecoms giant’s infrastructure division.

Mobile provider Three accused Ofcom and other UK regulators of “once again failing to stand up to BT” after the CMA approved its takeover of EE earlier this year, and Ofcom opted against forcing BT to sell off Openreach.

In a statement following Ofcom’s latest proposals, released today (July 26), Three said: “We are disappointed that Ofcom has fallen short of structurally separating BT, the only measure that would have delivered genuine competition and prevented BT from favouring itself.

“This is yet another example of UK regulators failing to stand up to BT after the CMA waved through its purchase of EE without any action following advice from Ofcom.

“Ofcom’s next big decision is the upcoming auction of 2.3GHz/3.4GHz spectrum and we urge the regulator to put consumers first and prevent BT increasing its holdings at the expense of a competitive mobile market.”

Rival reaction

Dido-HardingTalkTalk also criticised the decision, claiming legal separation will lead to a “a complex web of regulation”. Structural separation, it added, is much cleaner.

Dido Harding, CEO at the broadband provider, argued that BT is “an expert” at “exploiting loopholes in the regulation.”

“The creation of a legally separate Openreach is a step in the right direction, but we must not forget the history of the organisation,” she added.

“The intention ten years ago was to create a functionally separate division that served all customers equally, but that is far from what happened. The lack of clear rules and responsibilities meant that BT was (according to Ofcom) able to make £4billion in excess returns in a decade, and I fear we’re repeating the mistakes of the past.

“In taking one cautious step forward, I fear Ofcom may in practice have taken five steps back.”

“Step in the right direction”

Sky Group CEO Jeremy Darroch welcomed the reforms, claiming it was a step in the right direction, but warned Ofcom that the proposals would fall short of the full change needed to create “a world-class broadband network” in the UK.

“In particular, leaving Openreach’s budget in the hands of BT Group raises significant questions as to whether this will really lead to the fibre investment Britain requires,” he added.

“At the end of the day, Ofcom’s changes will only work if they deliver better outcomes for customers.

“It’s now important that the changes Ofcom have mandated today are implemented rapidly, fully and without dilution. We are encouraged by Ofcom’s stated commitment and willingness to use its powers to hold BT’s feet to the fire.”

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