Ofcom believes it should be possible to deliver most of the benefits of a structurally-separated, independently-governed Openreach while still keeping the business within the BT Group. FCS, which represents business comms providers, is far from convinced their proposed solution goes far enough to avoid another ‘undertakings’ situation.
“Slapping a fresh coat of paint on the ship and re-arranging the deckchairs won’t help when the crew’s all working to rule,” says FCS chief Executive Chris Pateman. “Especially when the rule book is the whole BT corporate culture.
“BT still acts and thinks like a nationalized monopoly provider, whose customers should be grateful for the opportunity to buy from it. One can just about deal with that at the retail end (though it’s deeply galling to see Openreach profits being syphoned off to buy sports rights, rather than re-invested in the network). After all, customers have a choice at of retail providers. The problem is that most customers do NOT have a choice of wholesale providers.
“Ofcom’s focus on creating competition at the reseller level has been a great success. But its failure to promote competition at the wholesale/network/ backhaul level has played to BT’s monopoly, stifled innovation and ended up short-changing thousands of business customers who have no choice but to buy the connectivity BT chooses to make available in their area. And to put up with lead times and delivery failures which would be utterly unthinkable in any other industry.
“It is an utter nonsense to talk of ‘functional separation’ when the Openreach CEO is appointed by, and reports to, the BT Group board. And when so many Openreach costs are concealed in group charges.”
FCS is concerned that Ofcom’s proposals fall short on a number of key issues. Not least the position on the make-up of an Openreach Board, and the puzzling refusal to consider full budgetary autonomy – including allowing Openreach to raise funds in the open market and the quid-pro-quo of BT’s own retail and wholesale businesses being able to source infrastructure services from other providers. It is hard to see how Openreach can be simultaneously independent and tied to a ‘spending envelope’ and associated cost of capital which might bear no relationship to market rates.
“The launch of today’s campaign marks a new beginning,” says Chris Pateman. “Openreach customers have had enough, and they are not willing to put up with another 10 years of fudge and compromise.
“Ofcom needs to deliver an Openreach which is fit for the future, not simply re-working the past. That means a much stronger response than is mooted in yesterday’s consultation, not a watered-down compromise. And the way to get that is to show Ofcom, politicians and BT itself that people want something better than they’ve been offered so far.
“FCS is proud to put the weight of the business to business community behind this campaign. It’s our only chance this decade to move the industry forward. UK business requires an Openreach which has the autonomy, the vision, the access to capital and the strategic long-term business plan to deliver for customers. Nothing less will do.”
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