UK Labour Party Joins Calls for Ofcom to Split BT from Openreach

The Labour Party’s Shadow Culture Secretary, Chris Bryant MP, has joined the debate over Ofcom’s strategic review of the United Kingdom’s digital communications market and come down on the side of those who want to see the regulator split BT from their network access division, Openreach.

As a party Labour are currently embroiled in a difficult leadership battle and won’t have to worry about actually setting down any hard policy until the next general election on 7th May 2020. Never the less it’s always good to highlight the views of a significant political party and in that sense Labour’s take on the question of BT’s future is an important one.

The national regulator, Ofcom, is currently considering the question of whether “separating Openreach from BT could deliver competition or wider benefits for end users” because among other things they say it would “remove BT’s underlying incentive to discriminate against competitors” (here and here). Rival ISPs would no doubt welcome this.

On the flip side such an approach could impact BT’s huge pensions deficit (a big slice might fall on the public purse), raises questions over the source of future network investment, could tie the regulator up in legal squabbles for years, might disrupt the roll-out of “superfast” connectivity under the government’s on-going Broadband Delivery UK programme and would appear to go against Ofcom’s own desire for a “lighter approach” to regulation.

Furthermore there’s no guarantee that a post-BT division of Openreach could actually do a better job on the engineering side and indeed there’s always the chance that the situation might even get worse. Suffice to say that Ofcom has its work cut out in finding the right balance to all of these aspects and now Labour’s Chris Bryant has added his voice to the debate.

Chris Bryant MP said (Telegraph Letter):

“The situation is now so bad that Ofcom’s review should work on the presumption that Openreach should be split from the rest of BT unless their review produces conclusive evidence to the contrary. At the very least Openreach should be held accountable for its poor quality of service – the delays for repairs, the missed appointments, the months of waiting to switch providers.

But Ofcom also needs to be brought into focus. Essential to a strong and competitive broadband and telecoms market is a strong and effective regulator. Ofcom has done a remarkable job, but all too often its hands are tied behind its back. Its current rules prevent it from getting tougher with Openreach and every decision it makes has to be triple-checked in preparation for a potential lawsuit from network operators that have far deeper legal pockets than Ofcom.

This has made Ofcom far more cautious than is good for the industry or the consumer. It is time the Government stopped dithering and got on with reforming Ofcom’s overly burdensome appeals process. Mobile and broadband consumers have suffered far too long delays and businesses have suffered unnecessary regulatory uncertainty. Thus far, with a swath of the country still travelling at a snail’s pace digitally, the system has failed to deliver.”

It’s worth noting that many of the rules which govern Ofcom and their regulatory approach today were reviewed and approved under the past Labour government and as such it’s notable that Bryant chooses his words carefully, although as you’d expect from a politician he still takes plenty of snipes at the Government.

Admittedly not all of his complaints are fair, such as the old claim that the BDUK programme is running two years behind schedule (he neglects to mention the raised “superfast broadband” coverage target from 90% to 95%). Mind you BDUK did suffer a delay, but in reality it probably equates to more like 6-8 months instead of 2 years.

At the same time there is room for further improvement at Openreach, both on the engineering side and in the desire for a generally more robust long-term telecoms infrastructure that can reach everybody. The example this morning of how some people can be left for months without a service is just one of many we’ve seen. But big improvements carry a cost, which is true no matter who is in charge, and consumers usually have to foot the bill.

Meanwhile Ofcom currently intends to publish a statement, which will set out its draft proposals, before the end of this year. At this point we’d be surprised if they did split BT, but if they do go for full separation then they’ll need to find a viable long-term solution for solving the mass of new challenges that would be created.