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Ofcom Does Not Rule Out BT Carve-Up

Iain Morris
5/18/2015

Dark-fiber directive
Ofcom's spokesperson also denied that last week's proposal to mandate the provision of dark-fiber services was in any connected with the broader strategic review or designed to satisfy service providers complaining about BT's market power. (See BT Kicks Up Stink Over Dark Fiber Proposals.)

"The dark-fiber proposition is specifically designed to help promote competition in leased lines, and in those parts of the country … where the market could be more competitive and innovative," said Ofcom's spokesperson.

From 2017, BT may be forced to let other service providers take control of fiber-optic connections in the business and mobile backhaul markets, depending on the outcome of an industry consultation now under way.

Some analysts have seen the dark-fiber proposals as a response to mobile operators calling for tougher regulation of BT.

"Vodafone has been particularly vocal about the need for a dark fiber product to connect base stations and backhaul mobile traffic without fear of interference from BT," said Matthew Howett, Ovum's practice leader for regulation, in a statement published last week.

"This is relevant since BT currently provides all UK mobile operators with high-speed mobile backhaul links," added Howett.

Light Reading is awaiting comments from Telefónica UK and 3 on the dark-fiber proposals, while a spokesperson for Vodafone UK says the operator is currently reviewing Ofcom's documentation.

Unsurprisingly, BT has been arguing strongly against the case for structural separation and is equally opposed to the need for dark fiber.

Last week, the incumbent argued that mandating dark fiber would gobble up resources and hinder its ability to make other service improvements.

BT CEO Gavin Patterson, meanwhile, has insisted that broadband investments of the kind BT has been making would never have materialized in a "structurally separated world."

Earlier today, BT also claimed its takeover of EE would benefit competition in a submission to the UK's Competition and Markets Authority. "It will be good for consumers, businesses and UK plc, as well as for BT shareholders, so we are keen to get regulatory clearance," said Patterson, in a company statement. "A larger BT will be able to invest and innovate even more than now, something that's good for jobs and good for customers."

CityFibre , an emerging rival to BT in the UK's wholesale market, is also in favor of structural separation but thinks more stringent oversight of BT could improve the competitive environment in the short term. (See Split BT to Lessen Regulation, Says CityFibre.)

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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Gabriel Brown
Gabriel Brown
5/19/2015 | 5:57:35 AM
Re: Too radical
Agreed. I can't see Ofcom mandating structural separation. It is fundamentally a conservative organisation that has the odd radical and progressive moment.

There's a decent piece on BT in the Financial Times (might need a login):

Strategy in action: the reinvention of BT

http://www.ft.com/cms/s/0/b5b2b624-f8bf-11e4-be00-00144feab7de.html

 
iainmorris
iainmorris
5/18/2015 | 12:17:50 PM
Too radical
I suspect structural separation will be too radical a step for Ofcom but it's still a surprise to see the regulatory authority is even considering it as an option. These strategic reviews don't happen very often and so the regulatory authority clearly believes there is a possible need for a major shake-up given some of the moves that are afoot.   
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