Joe Smithies, spokesperson for the UK telecoms regulator, defends the recent reform of Openreach, illustrates UK priorities for the review of the EU telecoms framework, suggests caution on bringing in more harmonisation in radio-spectrum policies.
The Digital Post: BT competitors lamented that in its long awaited Strategic Review of Digital Communications, Ofcom did not go far enough in regulating Openreach. How do you respond to this criticism?
Joe Smithies: We made a clear decision to reform Openreach’s governance and strengthen its independence from BT. We want Openreach to a more independent say on its budgets, investment and strategy. We also want Openreach to consult with all its customers, not just BT, about how it develops and invests in its network.
These decisions are important not only for BT, but for the wider industry. Now we are working on the best way to bring that about, and we will set out detailed plans later this year.
The Digital Post: How does the review ensure that Openreach improves its record in repairs and invests more in infrastructures, i.e. two of the main criticisms it has been collecting over the years?
JS: Currently BT Openreach is obliged to deliver a range of minimum standards. The majority of people encountering a fault must see it repaired within two working days, and the vast majority of those requiring a new line must receive an appointment within 12 working days.
We plan to set out detailed proposals about more demanding minimum standards for Openreach in the autumn.
On investment, we want Openreach to consult with all its customers, not just BT, about how it invests in the network. But more widely, we will encourage investment from other operators by requiring BT to open up its physical network, allowing rivals to lay their own fibre connections. That can create more rivals networks to Openreach, and in turn incentivise BT to invest.
The Digital Post: What should be the main priorities to be addressed under the upcoming review of the EU Telecom Framework?
JS: Concerns have been raised that the framework may not be sufficiently flexible to allow for the regulation of markets where there is a limited or shrinking number of players – in other words, an emerging ‘oligopoly’.
The framework allows regulators to take action to address damaging market features that could harm consumers, before that harm materialises. So it offers greater flexibility than, for example, remedies imposed during a merger.
But we feel the framework sets too high a bar for regulating cases where no one company has market power, but the market is still highly concentrated. To address any concerns, the framework requires regulators to show that the market structure is likely to result in a degree of coordination between operators. This may require demonstrating ‘tacit collusion’, which by definition is hard to prove.
BEREC, the European body of telecoms regulators, raised this issue in detail last year. We’re pleased that the European Commission is also considering the issue as part of the framework review. We hope to see changes that mean regulators have the full range of tools to respond to a changing market.
Any new powers would need to be applied proportionately, and with care. Checks and balances should be built into the system to ensure that happens. But with a change in the framework we could do more to encourage new operators into the market, and keep prices low.
The Digital Post: The framework review will also put forward proposals to promote better coordination in spectrum at EU level. What is your view?
JS: Spectrum is a finite resource, so coordination is important for using it effectively. Generally speaking, any form of harmonisation should be justifiable, proportionate and deliver tangible benefits. It should equally respect national sovereignty.
The UK works productively with the EU on spectrum matters, and we believe that the current system works well.