Analyst View: The latest stage in Ofcom’s strategic review of digital communications shows it’s listening to the industry’s concerns
Jul 16, 2015
On 16 July, Ofcom published its discussion document in relation to the ongoing strategic review of digital communications. It is open to responses up until 8 October before publishing some initial views in January 2016. Here are thoughts from Ovum’s Regulation Analyst:
“Leading up to its publication, BT and its rivals had been engaged in a bitter war of words in relation to where Ofcom should focus its priorities. Rivals to BT believe the incumbent should be further split up and the access division, Openreach, hived off. BT responded calling for PayTV to be in the spotlight. Both of these have made it into the discussion document, however neither should probably be the focus.
The strategic review seeks to ensure that the industry continues to meet the needs of end users. The last such review, a decade ago, lasted almost two years and ultimately led to the separation of BT’s access network. This review is unlikely to result in a further separation of the incumbent. While Ofcom recognises there are challenges with Openreach, in particular in relation to service quality, it heavily suggests that further separation will not address these, and could ultimately be disproportionate. That’s not to say that tweaks to the Openreach model aren’t likely.
What this review really does is present an opportunity for the regulator to properly consider the impact competing services coming from so called OTT players are having on the sector, and whether this impact warrants further deregulation of the traditional communications markets. As new, more nimble players such as Skype and WhatsApp have arrived on the scene and competed away traditional telco revenues, regulators have been somewhat constrained in their ability to react, and certainly have not responded in the way telcos might have liked. This is where Ofcom’s focus ought to be, and could even be an area where BT and its rivals find mutual agreement…”