The last Ofcom strategic review, which concluded in September 2005, led to the creation of Openreach, through which BT is required to provide network access to competing providers on equal terms. The regulator states that while this has delivered real choice, quality and value for customers, some challenges remain. The incentive for BT to discriminate against competing providers can be limited by regulation, but not removed entirely. In recent years, BT’s fibre lines are running closer to premises, which may require different models of competition than with the traditional copper network. Ofcom is also concerned that Openreach’s performance has been poor, requiring new rules for faster line installations and fault repairs.
Ofcom is seeking views and evidence on future regulatory approaches. These include retaining the current model with Openreach operating as functionally separate from BT, with regular market reviews addressing competition concerns; strengthening the current model by applying new rules to BT such as control on wholesale charges with stronger incentives to boost QoS or tougher penalties if it falls short; separating Openreach from BT, which would remove BT’s underlying incentive to discriminate against competitors and would simplify existing regulations, but may not address QoS issues or investment decisions; and deregulating and promoting competition between networks that could run fibre lines directly to premises, which could incentivise Openreach to improve its infrastructure, although it could lead to network duplication.
Furthermore, Ofcom will examine converging media services offered over different platforms or as a bundle by the same operator. The review also will identify where existing regulations could be simplified, removed or replaced. For example the growth of OTT internet communications services, such as instant messaging, may create a case for less regulation on mobile operators or for extending existing rules to internet-based services.
