Telecommunications giant BT expected to avoid being broken up from Openreach, in verdict due this Thursday
BT is expected to avoid having its infrastructure arm Openreach carved out this week, following months of campaigning for a split by the company’s rivals.
City PM understands the decision will be announced on Thursday in Ofcom’s Digital Communications Review, though will reportedly include requirements for minimum-service standards between Openreach and BT’s rivals Vodafone, Sky, and TalkTalk.
CCS Insight analyst Paolo Pescatore said: “We believe a full separation of Openreach is unlikely. Ofcom has acknowledged that the current system, in which Openreach operates as separate unit, has provided choice.”
Possible stipulations that Ofcom may impose are easier access for rivals to the cable network and local exchanges to install their equipment, as well as capping how much BT can earn from Openreach.
BT’s competitors argue that control of Openreach allows BT to exploit a monopoly by imposing high charges for access, and creates a conflict of interest.
BT claims that its rivals have benefited from its investment in the network and it is entitled to a return.
A TalkTalk spokesperson told City PM: “We are all agreed a radical change is needed.”
Ofcom doesn’t have the power to split up BT and Openreach however and would have to refer the matter the Competition and Markets Authority.
Ofcom’s once-a-decade Digital Communications Review is expected to have wider implications for the telecoms industry, potentially forcing broadband providers to advertise costs more clearly.
Last week think tank the Centre for Policy Studies (CPS) called for the break up of BT and Openreach after finding the UK is falling behind international competitors on broadband speeds.
The CPS compared a delay in the decision to the ongoing debate over runway expansion at either Heathrow or Gatwick airports.