Ofcom imposes new conditions on “unacceptable” BT Openreach

Under siege BT subsidiary Openreach faces renewed pressure from UK regulator Ofcom, which branded its wholesale and enterprise performance “unacceptable”.

Openreach has faced significant pressure from multiple angles since the start of 2016, when BT appointed a new CEO for the wholesale internet provider. Earlier this year, it faced additional pressure from 121 UK members of parliament calling for an enforced split from parent company BT; this along with sustained lobbying from fixed consumer broadband competitors like Sky and Vodafone, both of which rely on Openreach for connectivity.

Ofcom said BT needs to continue offering its wholesale products bundled together with optical fibre and BT’s own network gear at regulated prices; but it now also needs to allow rival ISPs to use their own network equipment on BT’s fibre optic cables, known as dark fibre.

In explaining Ofcom’s stance on today’s announcement, Ofcom’s Competition Group Director, Jonathon Oxley, berated BT’s Openreach performance for business services and lack of accessibility for competitors.

“BT is relied on by many companies to install these lines, and its performance has not been acceptable,” he said. “We have outlined plans to reduce the country’s reliance on BT’s Openreach division. Our proposals on ‘dark fibre’ do just that, letting BT’s competitors better serve their customers by getting direct access to BT’s optical fibre cables.”

Elsewhere in the new performance measures, Ofcom said BT will need to improve its leased-line installation date promise fulfilment rate from 75% to 80% by March 2017, and to 90% by April 2018.

It has found customer order fulfilment time has risen from 40 to 48 working days since 2011, and thus stated BT needs to gets this back down to 40 days by 2018.

“These new rules will mean companies across the UK benefit from faster installation times, greater certainty about installation dates, and fast repairs if things go wrong,” said Oxley.

Last month Ofcom decided there’s no overwhelming need for a split but did impose several conditions. As reported by Telecoms.com at the time, Ofcom said Openreach must open up its poles and ducts so rival ISPs can access the fibre network directly, and today’s announcement confirms something is actually starting to happen.

BT, however, doesn’t appear to agree with the stance taken by Ofcom. A BT spokesperson told Telecoms.com it is not surprised by today’s announcement, but warned excessive regulation at this stage of the industry’s development will be counterproductive.

“Competition and choice have been growing in the business connectivity market and we believe there is a strong case for less, not more, regulation,” BT said.

Speaking specifically about the imposition of regulation on dark fibre from Ofcom, BT didn’t hide its disagreement, without going so far as to directly challenge the regulator.

“Dark fibre is a flawed piece of regulation that introduces an unnecessary layer of complexity and will deter others from building their own fibre networks. It is at odds with Ofcom’s recent statements about increasing competition at the infrastructure level. It is a cherry pickers’ charter benefiting those who don’t invest in networks at the expense of those who do including BT, Virgin Media, City Fibre and Zayo.”

BT’s stance suggests Ofcom is taking a hard line on Openreach, and that little consultation with the operator took place before today’s announcement. While the new measures require approval from the European Commission, BT may be in for a tricky time ahead if Ofcom decides to continue turning the screw.