Ofcom protesteth too much on Openreach independence

The UK regulator has long stuck by its position that the system works: BT and its erstwhile networks business are legally separate and are operating as they should be. But much of the rest of the market thinks differently.

Ofcom published its latest monitoring report on the relationship between Openreach and BT on Wednesday and once again asserted that it sees no evidence of any untoward behaviour. But the report itself shows that there have been issues raised over the past 12 months, ones that Ofcom has decided do not warrant further action, while anecdotal evidence from the market suggests that rivals are not particularly happy with the set-up.

Nonetheless, the regulator wants us to know that it is prepared to take enforcement action against Openreach and BT should it prove necessary...but that doesn't seem likely any time soon.

"We have been meeting with BT's rivals to listen to their concerns and have not found sufficient evidence to open any new formal investigations over the last year," Ofcom said, in a statement.

"During this period, we have seen evidence of efforts by BT Group to renew and refresh its engagement with the framework that underpins Openreach's independence. This follows the appointment of a new CEO, Allison Kirkby, who served as a non-executive director on BT's sub-committee charged with monitoring its compliance with the independence arrangements," it added.

Ofcom's insistence that all is well appears to be based on its regular chats with staff at BT and Openreach to make sure the companies are complying with a set of commitments that underpin their relationship.

That's all very well, but the report itself shows that there have been breaches of those commitments in the past year, but Ofcom was happy that they were dealt with by the companies themselves. Admittedly, those breaches were not hugely egregious, but it's easy to see why rival players are less happy with the status quo than the incumbents.

The report does not include much detail on the nature of the issues. Openreach reported a couple of "trivial" breaches, both linked to the inappropriate sharing of customer information, and highlighted areas where certain internal policies were not followed, Ofcom said. For its part, BT also report two trivial breaches and one more serious, the last relating to the incorrect installation of cables, although Ofcom notes that the impact on communications providers was minimal.

"Our assessment is that none of these incidents involved an intent to breach the Commitments nor were any CPs advantaged or disadvantaged, and in addition, our view is that each was thoroughly and robustly investigated by the BT and Openreach compliance functions. We therefore did not take any additional action," Ofcom stated.

The report also covers Openreach's performance within the context of the Wholesale Fixed Telecoms Market Review (WFTMR). The areas that make for the most interesting reading are those that look at its engagement with other market players.

"Stakeholders have brought issues to us across a number of areas where their main concern has related to Openreach’s approach to negotiations with their customers, specifically their perceived reticence by Openreach to engage or discuss with their customers prior to announcing commercial decisions," the report reads. Examples include Openreach's move to increase late cancellation charges, service level guarantee negotiations and the consent process for FTTP installations.

Similarly, other industry players have complained about incidents where they felt BT and Openreach's decisions left them at a disadvantage, such as a decision by Ofcom not to allow FTTP installation when the customer is identified as a telecare user, regardless of whether that telecare service is compatible with VoIP.

But it seems Ofcom is staying well out of it.

"This is a complex area and we understand that recent discussions between Openreach and industry have progressed this issue positively," it said.

There have also been concerns raised over Openreach's energy charges in its colocation spaces, which some customers deemed too high, but Ofcom's not getting involved there either.

And it also dismissed suggestions of anticompetitive behaviour from Openreach when it comes to fibre build, or more to the point, overbuild. Specifically, there have been accusations of Openreach selecting build locations based on where rivals have chosen to build, its announcements often coming soon after those of alternative players.

But again, Ofcom is not really worried and is taking Openreach's word that it's all above board.

"In all of the cases we have looked at, we have not seen any evidence of Openreach strategically targeting areas where competing networks have built or plan to build to harm competitors or deter rollout in wider areas. The evidence we have seen has not found any suggestion that Openreach's build decisions are not commercially rational, and we are satisfied with the explanations behind build decisions given to us when we have asked Openreach about these," Ofcom said.

"We do however recognise that there remain substantial industry concerns about overbuild and we will continue to monitor these matters closely," it added.

That's some serious regulatory action right there.