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Three forms of BT Separation: Objectives, solutions and effects

UEA CCP Working Paper exploring three forms of separation of BT: their motivations and possible effects on investment.

Following its latest strategic review of the digital communications sector, Ofcom has proposed that BT’s access services division, Openreach, becomes a subsidiary of BT plc. BT has put forward a counter proposal it terms Enhanced Functional Separation. This paper reviews the two proposals and compares them with the current situation. It finds that the differences between BT’s and Ofcom’s proposals are less substantive that might appear at first sight. The paper also considers the whether the incentives for BT to invest in taking fibre access networks closer to the customer are likely to be any different under the two proposals. Again, the paper is sceptical that the legal separation proposed by Ofcom would result in greater incentives than would occur under Enhanced Functional Separation.

The Working Paper can be dowloaded from the UEA CCP website.