BT's Openreach business could be spun off in Ofcom review

UK broadband: Ofcom has announced the first phase of its digital communications review
UK broadband: Ofcom has announced the first phase of its digital communications review

BT could be forced by Ofcom to sever its infrastructure business Openreach from the rest of the company, in proposals outlined by the media regulator this morning.

Announcing the first phase of its digital communications review this morning, Ofcom said it was "concerned" that BT's Openreach service on behalf of providers has "often been poor".

Meanwhile, Sky has called on Ofcom to recommend the Competition and Markets Authority carry out a full competition inquiry.

Today Ofcom has asked for views and evidence on how it can improve competition in the sector.

One of four proposals includes separating Openreach, which maintains the main national telecom and broadband wire networks, from BT. This "would remove BT's underlying incentive to discriminate against competitiors".

The other options are to retain the current model, strengthen the current model by applying new rules to BT, and deregulating and promoting competition between networks, such as smaller ones owned by Virgin Media.

Sky, which has faced increasing pressure from BT in recent years in the "quad-play" market to offer internet, TV, telephone and mobile phone packages, welcomed Ofcom's announcement.

In its submission to the Ofcom review, Sky pointed out that more than 90 per cent of new line installations, which require an Openreach engineer to attend, take ten calendar days or longer.

Sky also said Openreach misses 500 appointments each month to install new lines for Sky customers.

Mai Fyfield, Sky's chief strategy officer, said: "It is welcome news that Ofcom is putting the future of Openreach at the centre of its review.

"For too long, consumers and businesses have been suffering because the existing structure does not deliver the innovation, competition and quality of service that they need.

"We believe Ofcom should now move quickly to ask the CMA to undertake a full competition inquiry. In a rapidly changing sector, it is vital for the UK that the national telecoms network delivers a service fit for the 21st century."

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