BT to split from Openreach: Industry reaction and analysis

In light of today's announcement, various industry professionals have offered their reaction and analysis.

The big news today is that communications watchdog Ofcom has put its foot down and ordered BT to split from Openreach after a huge amount of debate from within the industry.

In light of the announcement, various industry professionals have offered their reaction and analysis.

Kester Mann, Principle Analyst, Operators at CCS Insight:

“Today’s news shows that Ofcom remains hugely concerned over BT’s ability to satisfy its competition concerns. It again highlights clear flaws in the existing Openreach model and a worry that UK broadband deployment could be restricted without serious change. Steering clear of a structural split is unsurprising. This would have been the most controversial and costly action Ofcom could have taken, but would still not have offered guaranteed improvements for customers.

“No doubt, BT’s rivals will criticise Ofcom for not being brave enough to push for structural separation. But after many months of campaigning, they should see the regulator’s efforts to engage with Brussels as a partial victory. The move toward legal separation and greater independence will bring important benefits to companies like Sky and TalkTalk in the long-term.

“Today’s announcement represents just the next stage in a long and protracted issue. Expect further lobbying from all parties and old arguments to be recycled. In the interest of stability and market certainty, the sooner a final outcome can be reached the better.”

Richard Neudegg, Head of Regulation at uSwitch.com:

"This is a last-minute warning shot to BT to improve its offer on how legal separation would work. It would appear Ofcom is still open to BT proposing a better voluntary deal. Ofcom isn't changing its position at all. The regulator is still gunning for legal separation rather than full structural separation and is using a potential notification to Brussels in an attempt to ensure it can get this over the line.

"Those calling for structural separation – including Sky and TalkTalk – will be disappointed this option still isn't being considered more closely. But this is one step closer towards finding a version of Openreach that maximises investment in new digital infrastructure while still allowing effective competition. Many agree that is what's needed, but disagree on how to do it. Ofcom is clearly seeking to strike a balance."

Andrew Ferguson, editor of thinkbroadband.com:

“The legal separation avoids the more difficult issues that would have arisen if Openreach PLC had been created. Operating as a fully owned subsidiary should give Openreach more room for manoeuvre and it is clear that any decisions by a new Openreach Board will be carefully watched by Ofcom to ensure BT, its largest customer, does not have undue influence.

“What needs to happen now is for the campaigning to end and the hard graft start on ensuring things like customer service improve and where operators want a pure fibre roll-out that they make this fully clear to Openreach. The future has always been one with many millions of fibre to the premises, the debate is usually around the timeframe involved and the campaigning by TalkTalk and others has made it clear that they were not happy with the previous slow and steady approach so it is going to be exciting to see how things change, or whether they change at all.”

Jaime Fink, Co-Founder at Mimosa Networks:

“Despite Ofcom’s proposal, the infrastructure problems facing the UK market that prevent the rollout of a nationwide next-generation broadband network still remain. The DSL (cable) foundations that underpin much of the UK’s broadband network simply do not offer the bandwidth and reliability to support today’s internet applications and meet the demands of tomorrow’s increasingly data rich services. The roll-out of fibre also continues to present challenges in rural and dense urban areas, where the cost and disruption of digging trenches has prevented the roll-out of fibre, leaving consumers and businesses with low-performance broadband solutions.

“Openreach and other UK service providers must change their approach and look at new technologies that can profitably deliver a superfast sustainable broadband network. Lessons can be taken from the U.S., where new broadband market entrants such as Google and Facebook are turning to fibre alternatives in the form of fixed wireless, in order to better connect their customers. The technology can deliver fibre-like broadband connectivity in any environment, without the cost or disruption of its cabled alternatives.

"The technology will make it possible for service providers to extend their broadband services to areas that have traditionally been financially and logistically challenging, and meet the call from consumers, businesses and government bodies to deliver superfast broadband across the country.

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