Ofcom is keeping schtum over BT Openreach plans until end of year

Regulator will then beg for EU permission to act


Telecoms regulator Ofcom will not release details of its proposals for greater structural separation of Openreach and BT until the end of the year.

In February the regulator stopped short of recommending a full separation of BT and Openreach in its Digital Communications Review.

Ofcom will now draft its "proposals for discussion" between October and December, which will go before the European Commission to force the issue of greater independence.

It said: "We will develop detailed proposals to bring about greater independence and autonomy of Openreach for discussion with the European Commission," according to its Annual Plan for 2016/17.

Ofcom will also publish plans to open access to BT's telegraph poles and ducts by competitors as part of its Wholesale Local Access market review, also due in the third quarter of the financial year.

It said enhanced structural separation was needed as it had found evidence that Openreach still has an incentive "to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems."

In a briefing following the publication of its once-in-a-decade review, Ofcom's group director Steve Unger said that in an ideal world the regulator would have recommended a formal separation of the businesses, due to the "significant failings" of the current model. However, the property and pension costs associated with that option led the regulator to reccomend a “formal separation in everything but name” approach.

Ofcom chief Sharon White insisted that formal separation would remain an option for the regulator.

"When we describe this as an option over which we reserve the right, that is genuinely the case. It is not there in the background because we forgot to take it off the table."

Jonathan Oxley, group director for competition at Ofcom, said BT had submitted voluntary proposals for reform but they "didn't cut the mustard."

Also speaking after the publication of the review, Mark Shurmer, BT's group director of regulatory affairs, said BT hoped it could still reach a voluntary agreement with Ofcom.

He said: "The alternative to a voluntary separation is that we would have to go to Brussels. That will be a long process, so it would be in everyone’s interest [to avoid that route]."

He added: "We now need to look at detail of what Ofcom wants to change and see what more we can do." ®

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