BT Seeks Ofcom Approval to Fold Wholesale Division into Openreach

Competition concerns are likely to be high on Ofcom’s list after BT reportedly asked the United Kingdom’s national telecoms regulator to let it fold their BTWholesale division, which last year reported sales of £2.4bn, into BTOpenreach.

Openreach is kept as an arms-length (semi-separate) organisation that maintains and upgrades BT’s national broadband and phone network which, as part of Ofcom’s regulatory framework to ensure fair competition, must operate under a stiffer regulatory regime. By contrast BTWholesale buys products from Openreach like other ISPs and also sells similar services to some of the same businesses.

But over the years Openreach has moved into many of the same areas that BTWholesale once occupied and so there could be cost savings in combining the two. However BT’s rivals, particular Sky Broadband and TalkTalk (plus smaller providers like Zen Internet etc.), might well fear that combining the two could risk giving BT’s own consumer and business (retail) services an unfair advantage.

A BT Spokesman said:

“We are always looking at ways in which we can better meet the needs of our customers and reflect market changes. One question we are examining is how we can better serve our wholesale Communications Provider customers currently addressed by Openreach and BT Wholesale.”

According to The Telegraph, BT wants a deal to be reached within weeks rather than months, although Ofcom has also warned that such a major change would require a “full public consultation with interested parties and industry” and these are rarely swift.