Launching its first review of the United Kingdom (UK) telecom market in more than a decade, British regulator Ofcom is soliciting public comment on a discussion document that covers the status of competition, the improvement of mobile services, and methods by which regulators can facilitate deployment of “future ultrafast broadband” networks and services.
The document, issued last Thursday in connection with Ofcom’s Strategic Review of Digital Communications, builds upon the results of the last such review conducted in 2005. The results of that review induced Ofcom to mandate the functional separation of dominant UK network provider BT Group from BT’s wholesale access unit, Openreach. As part of the upcoming competition review, which Ofcom has described as the “major focus” of its efforts, Ofcom is seeking public input on various regulatory approaches vis-à-vis BT and Openreach that envision (1) maintenance of the status quo, (2) strengthening the current regulatory model through the application of new rules, or (3) full structural separation of Openreach and BT. While acknowledging that the current regulatory model “has delivered real choice, quality and value for phone and broadband customers over many years,” Ofcom noted that structural separation could “deliver competition or wider benefits” to end users and could also “remove BT’s underlying incentive to discriminate against competitors.” Some competitors that have sought access to the BT network through Openreach have complained of poor service and have urged Ofcom to mandate structural separation or establish an independent, national broadband network for use by all UK providers. While noting that a fourth option of market deregulation could also be considered, Ofcom observed that Virgin Media and several other UK operators operate their own facilities-based networks “which allow them to provide phone and broadband services without using BT’s network at all” and that such “end-to-end competition . . . can help incentivize Openreach to improve its infrastructure.”
Ofcom has set an October 8 deadline for the submission of comments and expects to issue a statement “at the turn of the year on priorities and action.” Defending his company’s record, a spokesman for BT explained that improvements in the carrier’s network infrastructure over the past decade were attributable to “BT’s investing billions of pounds in fiber at the height of the recession” and that such investments “wouldn’t have occurred had BT been split in two a decade ago.”