In 2014 Ofcom set up a Digital Communications Review, which will examine – among other issues – the role of BT Openreach in the provision of broadband in the UK. Ofcom is due to report on this review later this month.
BT Openreach is required by law to allow UK broadband service providers to access its wholesale broadband infrastructure, which maintains broadband access for 30 million customers. Some argue that the broadband to home services provided by BT Openreach are effectively operating in a market that is a natural monopoly. Our economic bulletin seeks to highlight how best to increase competition into this natural monopoly.
Service providers using BT Openreach’s infrastructure for broadband packages include BT, Sky, Talktalk and Vodafone. Many of these service providers have lodged complaints to Ofcom. These complaints include evidence of poor quality customer service, problems arising from a conflict of interest between BT and BT Openreach and concerns relating to the future investment in UK broadband infrastructure. Companies including Vodafone and Sky have made representations to Ofcom for there to be “structural separation” between BT and BT Openreach.
Ofcom does not have the power to split BT from BT Openreach – despite this being implied by the British Infrastructure Group. Ofcom could, however, refer this issue to the Competition and Markets Authority if it feels appropriate to do so.