Vodafone, Sky hope for joy from wider Openreach separation - Mobile World Live

Vodafone, Sky hope for joy from wider Openreach separation

26 JUL 2016

UK telecoms regulator Ofcom wants to further separate local network unit Openreach from parent BT, a move which should boost its telecoms market rivals.

The watchdog is proposing a raft of measures including Openreach becoming a legally separate company within BT Group, with its own Articles of Association, and its own board of directors.

The aim is for the local networks unit to offer improved access to unbundled broadband for the the likes of Vodafone, Sky and TalkTalk.

Since 2005, Openreach has been functionally separate within the BT group and is mandated to treat rivals, including Vodafone and Sky, on the same basis as its parent’s retail arms.

But Ofcom argues the local network unit is still too much under its parent’s control. “The underlying incentive for BT to discriminate against its competitors remains,” the watchdog concludes.

Ofcom’s latest measures are an attempt to sever the links between parent and subsidiary, short of full structural separation which the regulator argues would take too long to implement and be too disruptive for the wider market.

Measures laid down by Ofcom include appointing a CEO of Openreach who is accountable to its board, and not BT Group. In addition, employees should work for Openreach rather than BT.

“This would prevent any real or perceived conflict of interest, and allow Openreach to develop its own distinct organisational culture,” said the regulator.

Openreach must consult more with its customers, such as Sky and TalkTalk, on large-scale investments. Plus there has to be confidential phase to such talks when rivals can disclose their plans, without feeling they might be leaked to BT.

In addition, the local network unit should own its own physical network.

The industry has until 4 October to respond to Ofcom’s plan.

Author

Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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