Is BT a service provider, or an infrastructure owner? Failure to properly deal with this question during its privatisation in 1984 has been a source of numerous allegations by rivals about margin squeeze and unfair cross subsidisation, particularly over unbundling the local loop. True and effective competition within the UK telecoms market is not possible without a network in third party ownership.

Ofcom’s proposals

In July 2016, Ofcom set out its competition concern that BT has the ability and incentive to favour its own retail business when making strategic decisions about new investments in the Openreach network. Following public consultation, Ofcom proposed o create a more independent Openreach through ‘legal separation’. To achieve this, Ofcom wants Openreach to become a wholly owned subsidiary of BT, with its own board and decision-making process. The majority of board members, including the chair, would be non-executive directors not affiliated with BT, although these non-executives would be appointed by BT in consultation with Ofcom.

The full version of this article by Robert Bell, Robert Wieder and Ping He was published in Real Business, and can be accessed here.