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Vodafone UK Tells Ofcom to Make “bold structural” Changes to BT

Monday, October 19th, 2015 (2:36 pm) - Score 739

Telecoms giant Vodafone has today published a detailed summary of their submission to Ofcom’s Strategic Review, which is considering whether or not to separate BT from control of their national UK telecoms network (Openreach). Unsurprisingly the mobile giant is in favour of big changes.

It’s fair to say that Vodafone has already taken a fair few pops at BT over the past few weeks (here and here) and in that sense today’s announcement merely confirms their position. As before this focuses on their demands for full separation of Openreach, as well as access to BT’s national Dark Fibre network and a more flexible Pay TV market (that last one is perhaps more aimed at Sky).

Vodafone’s Demands

* Address discrimination and improve pro-competitive investment with the structural separation of BT Openreach;

* Put in place the framework for multi-operator investment by improving access to BT’s ducts and poles, ensuring BT must also use these products on the same basis as other providers;

* Make it easier for consumers to switch suppliers across multiple services such as Pay TV, broadband and mobile; and

* Ensure fair access to exclusive premium TV content and evaluate future auction processes to prevent consumer exclusion from viewing key sporting events.

The mobile operator further claims that “longer-term competition has been undermined by the regulatory freedom given to BT“, with the primary focus of this comment being upon the incumbents roll-out of 40-80Mbps capable Fibre-to-the-Cabinet (FTTC) technology that first began in 2009/10.

The comments somewhat reflect how Ofcom originally gave BT some protection from aggressive regulatory controls, at least for a period of five years, in return for their pushing investment into the deployment of FTTC and related enhancements. Mind you BT might well argue that they too have to take the same products as everybody else.

Never the less Vodafone claims that the services delivered via BTOpenreach’s network are today defined by two key characteristics, “poor quality of service and high profitability“, which also reflects the operators claim last week that BT made £6.5bn more in excess profit than what Ofcom’s regulatory model should allow. BT for its part has previously described this as being “ludicrous” and “wildly inaccurate“.

Instead Vodafone, which states that Ofcom’s “current regulatory model no longer works“, are advocating a multi-operator investment approach to the deployment of ultrafast (100Mbps+) fibre optic broadband networks (e.g. FTTH/P). The mobile giant claims this has worked in Spain, Portugal and soon Ireland too (it’s not easy to make apples to apples comparisons here).

Mind you it does take a very.. very long time to roll-out and not to mention that these approaches don’t always cover 100% of the country, which may still leave plenty of rural gaps. Finding the many billions needed to do the work is another challenge, although Vodafone has previously hinted that they might be willing to help out on that front (a bit more detail here would help).

At the end of the day Vodafone, which recently shelved talks with Liberty Global that might have seen their UK division gain access to Virgin Media’s significant fixed line fibre network, are clear that they don’t want to see Ofcom merely making “incremental tweaks to regulation” to address these issues.

Ofcom now has the unenviable task of examining the market and reaching a conclusion. Privately many operators might be able to stomach BT retaining control of Openreach, but they’d still be expecting Ofcom to make some big changes. Interestingly the regulator has already signalled that they might be willing to go quite far, such as with their earlier Dark Fibre proposals (here).

Leave a Comment
10 Responses
  1. Avatar TheFacts says:

    I look forward to reliable 2G mobile coverage from Vodaphone.

    1. Avatar Clark says:

      You could always move house, that seems to have been a previous stock answer for those that can not get FTTC. No doubt then your coverage will differ.

  2. My heart bleeds for them!

    “poor quality of service and high profitability” – pretty much like Vodafone really.

    1. Avatar Matt says:

      Actually the UK branch off Vodafone isn’t that profitable. But I get what you saying though in fairness to Vodafone there network is leap and bounds better in 4G areas so when rollout is finished think it will be pretty solid.

    2. Avatar Steve Jones says:

      I think he was pointing out the hypocrisy of Vodafone’s complaint in view of the fact that their own service has gaps.

  3. Avatar AndrewH says:

    Pot Kettle and black come to mind.
    Vodafone still only 2G down here nearly everywhere.
    Worse still their map is deliberately misleading when you click the 3G button.
    It shows 3G with 2G internet and email.
    I would argue that BT (albeit with BDUK prodding them) are rolling out FTTC far faster than Vodafone are rolling out anything.
    Can’t see their 4G being here any time soon either.
    Thank God for EE. I virtually never see GPRS or EDGE anymore!

  4. Avatar MikeW says:

    Vodafone are attempting to deploy FTTH in ireland, which makes them 1 step more credible than Sky. I find myself slightly more willing to listen.

    However, I see a few strange things in here…

    In one breath, they are asking for complete structural separation of Openreach. That, presumably, is meant to get a company that can stand on its own two feet, free of regulation, and willing to treat Vodafone as a customer on a fully equal basis with rBT.

    In the next breath, they demand that they be given better access to BT’s poles and ducts. Which, presumably, they really mean to get access to Openreach’s ducts and poles. Why call for Openreach to be split off, and then regulate it even more heavily?

    I see a lot of focus on how they want to be able to beat BT Retail, but I don’t see anything about how a standalone Openreach will benefit, or how this will create more ultrafast fibre in the UK. I hope they sent Ofcom a slightly more detailed response…

    1. Avatar Gadget says:

      On the point of treating all CPs equivalently the EAB annual report suggests that not only is this already the case, but there is a mechanism for CPs to challenge any issues. So far the reading suggests that there is no basis for the belief that external CPs are losing out
      http://www.btplc.com/Thegroup/Ourcompany/Theboard/Boardcommittees/EqualityofAccessBoard/Publications/EAB_Annual_Report_2015.pdf

    2. Avatar Clark says:

      Yes because BTs own bible verses are of course going to state they do not treat all CPs equivalently isnt it!

    3. Avatar Gadget says:

      That could be easily claimed if it weren’t for the external audit by PWC of the report and its conclusions.

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