Parliamentary committee suggests BT could face Openreach separation if it fails to offer reforms

20 Jul 2016

A report published by the UK’s Culture, Media and Sport Committee has claimed that fixed line incumbent BT is ‘significantly under investing’ in its infrastructure arm, Openreach. With the Committee having concluded that the shortfall in investment could potentially be hundreds of millions of pounds a year, it argues that BT has exploited its position to make strategic decisions that ‘favour the Group’s priorities and interests’, while suggesting the operator may have sacrificed shareholder value and customer benefit as a result. Consequently, the Committee has demanded that BT invest significantly more in Openreach, while also allowing the infrastructure arm more autonomy over what, where and when it invests. Further, while the Committee said it supports Ofcom’s plans for establishing greater separation between Openreach and BT, it has also suggested that, should the telco fail to ‘offer the reforms and investment assurances necessary to satisfy [the Committee’s] concerns’, the telecoms regulator should move to enforce full separation of Openreach.

Alongside its conclusions with regards to Openreach and BT, the Committee’s report includes findings covering a number of other areas. Among these, it claims that while Ofcom’s charge control regime has kept a downward pressure on prices, this mechanism has not been successful in holding Openreach to an adequate quality of service, while it has also questioned how effective overall it has been in stimulating investment in Openreach’s infrastructure. Meanwhile, the Committee has also argued that there is a ‘compelling case for expanding the current USO (Universal Service Obligation) for telephony and dial-up internet to cover broadband’. As such, it has urged the government to introduce this updated USO ‘at the earliest point, possibly as early as 2018’.