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Ofcom warns that BT and Openreach could be forced to split up

Ofcom chief says that current status quo will probably be shaken up in January 2016.

Ofcom warns that BT and Openreach could be forced to split up

The head of Ofcom, the UK's communications regulator, has warned that big changes are afoot for BT and Openreach. Ofcom chief Sharon White is still keeping her cards fairly close to her chest, but it sounds like something dramatic is about to occur: extensive deregulation; some strict rules on how Openreach goes about fixing, installing, and upgrading its network; or a complete structural separation of Openreach into a separate company. A final decision is expected in January 2016.

Speaking to the BBC, White said that "I think there will be change. We're looking at a number of options, but I think it is very unlikely we will conclude that the status quo which has worked over the last 10 years is where we are likely to be over the next decade."

The "status quo" that White refers to is Openreach's status as a subsidiary of BT Group. Prior to 2006, BT was just one big entity with a variety of arms. To improve competition, the company's infrastructure division, which owns and manages the UK's nationwide telephone and broadband network, was spun off into a subsidiary called Openreach.

Openreach, which has its own CEO and a charter from Ofcom to provide an equal level of service to every ISP in the country, has generally done a pretty good job of building and maintaining the UK's telecoms infrastructure. Compared to other European nations, Ofcom's White said that Openreach has done fairly well at rolling out the new FTTC/superfast broadband service.

BT's rivals, though—companies like Sky, Vodafone, TalkTalk—claim that Openreach could be doing a lot better, especially when it comes to installing new lines, repairing faults, and generally providing a high-quality service

At the moment, a company like Vodafone only really has one option for connecting its mobile base stations to a national backbone: a leased line from BT. If Openreach is slow at installing that line, there's not much that Vodafone can do about it. Likewise, when Sky signs up a new broadband customer, it is wholly reliant on Openreach to actually install that broadband connection. If there are delays, it is usually Sky that gets lumbered with the negative sentiment rather than Openreach.

BT's competitors argue that, by splitting the company up properly, Openreach would be more inclined to act fairly and competitively. This quote from a Vodafone spokesperson gives you some idea of how strongly BT's rivals feel about the current setup: "Regulators must decide. Either break up BT and get the true competitive fibre Britain needs to compete with the world... or let BT recreate its monopolist past and watch Britain's economy fade away."

BT, of course, maintains that everything is just fine: "We believe the current model works extremely well but there is always room for improvement and for deregulation given the UK market is now far more competitive than it was a decade ago," a BT spokesperson said.

Ofcom is expected to make a final ruling on Openreach's fate in January 2016. There are four possible options: maintain the current status quo (which is unlikely); more deregulation; stricter rules for repairs and installations; or a complete structural separation of BT and Openreach. The ongoing merger of BT and EE is also likely to play a role in Ofcom's final decision, due to BT's aforementioned monopoly on providing leased lines to mobile base stations.

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Channel Ars Technica