Can legally separating Openreach deliver real change?

9th January 2017  by Union Street

The recent announcement from Ofcom of its intention to ‘legally separate’ Openreach within the BT Group has sent shockwaves through the communications industry, creating division in the channel between those that have welcomed it and those that felt it didn’t go far enough.

Many key industry stakeholders had pushed for the full ‘structural separation’ of Openreach from the BT group. In its Strategic Review of Digital Communications, published February 2016, Ofcom itself described this option as “the cleanest and most clear-cut long term solution”.

Ofcom opting for ‘legal separation’ could, therefore, be seen as pragmatism on the regulator’s part. In all likelihood structural separation would face a legal challenge from BT and there would be other complex legal and logistical issues that would have to be reconciled, inevitably slowing down implementation.

So will legal separation provide an acceptable reform?

It certainly has the potential to deliver meaningful change to Openreach much more quickly, and a timely solution is almost always the best one. Real change is needed now and if it will take years just to divide up the BT pension pot, any benefits that would come with full structural separation will come too late for many resellers.

In reality, even legal separation will still take time to change the culture of BT and Openreach’s interactions, but this is probably the best outcome that could be expected at this stage.

A successful implementation of Ofcom’s plan will counter many of the inequalities created by the current administration of Openreach and should deliver clear benefits moving forward.

As with all things the devil will be in the detail. Union Street has written to Ofcom on behalf of our partners to lodge concerns around key points of its proposal, suggesting how these could be strengthened and more clearly defined.

A copy of this response can be viewed at Ofcom’s website

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