Ofcom has today ordered BT to legally separate itself from its Openreach division, which is the company in charge of the UK’s broadband and telephony infrastructure, and whose performance effectively governs the speed and reliability of most of the UK’s broadband connections. Here are our 4 key reasons why we think this is good for British businesses, and small businesses in particular.
The Government has rightly identified our broadband infrastructure as an essential part of the UK economy, both now and in the future, which is why it pledged £1bn towards faster broadband in the Autumn statement.
This is also a key driver of Ofcoms actions – it clearly sees Openreach’s current structure as a barrier to the roll out of faster wired connections across the UK. BTs rivals agree; Sky, Vodafone and TalkTalk have continually criticised Openreach’s levels of investment in the infrastructure on which they all depend, even going as far as launching a campaign to pressurise Openreach into more upgrades.
We’ve also seen evidence of this in South Yorkshire, where the Sheffield City Region has essentially had to pay BT itself to fibre-enable a whole host of green cabinets throughout the region.
2. Clearer Mission Focus.
The innuendo has always been that whilever BT Group retains control over Openreach’s finance and assets it can still effectively ‘manage’ Openreach by proxy, whilst also falsely inflating its own market position to investors.
Whether this is true or not, a more separate company with a more direct relationship with both the regulator and, by extension, customers, must surely give a greater clarity of focus to Openreach as an organisation. By association you would assume there would have to be some changes within the management of Openreach and its services too, so let’s hope fresh blood will equate to fresh ideas!
If it’s to drag our ancient telecoms infrastructure into the future, it will certainly need it!
3. More bang for the buck.
Some of BT’s competitors have said in the past they would be willing to invest even more in Openreach to improve infrastructure once they are assured of its independence. This is because Internet Service Providers know there is a gap in UK broadband market that is currently vastly under-served – namely businesses and individuals who need faster speeds than the UK’s average of 22.8Mbps but can’t afford the £300-£1000 per month a private fibre line costs.
The Government, too, will be looking for greater accountability and detail from the new arrangement than it currently gets via BT – if you invest £1bn in anything you need to know what you’re getting for your money!
Hopefully this will mean more of the money that goes into Openreach comes out the other end as fast broadband!
4. Less market confusion.
Believe it or not, despite it being 32 years since the deregulation of UK telecommunications industry began, we still come across people who think you need to go to BT for any changes to your telecoms provision.
What maintains such misconceptions is that the BT logo has been present on the streets of Britain for many years, attached to the Openreach logo. This is the element which perhaps skews the market the most when it comes to Openreach’s relationship with BT.
Whilst it’s true that the BT part of the logo has got smaller and smaller over the years, Openreach’s 2,500 engineers are still effectively moving advertising hoardings for a brand that is not meant to benefit from its association with Openreach.
Clarifying this relationship, maybe even via a rebrand, should help educate consumer and create more competition in the marketplace, ultimately bringing down prices (well, that’s the hope)!
What do you think?
I've posted this same article on LinkedIn so you can let me know your thoughts. Will it affect your business?