MASTERCLASSING

BT agrees to legally separate from Openreach after Ofcom pressure

Tyrone Stewart

BT has agreed to legally separate from Openreach after bowing down to the demands of telecoms, broadcasting and postal industries regulator Ofcom, regarding its fears surrounding competition.

The separation means Openreach will be become a distinct company with its own staff and management – with its directors being legally required to make decisions in the interests of its customers, as well as developing its own strategy and operating plans.

Sharon White, Ofcom Chief Executive, said: “This is a significant day for phone and broadband users. The new Openreach will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry – not just BT.

“We welcome BT’s decision to make these reforms, which means they can be implemented much more quickly. We will carefully monitor how the new Openreach performs, while continuing our work to improve the quality of service offered by all telecoms companies.”

Industry reacts

The industry has generally reacted positively to the news of BT’s agreement to let Openreach spread its wings, but they know that how, and if, the consumer benefits from this is the most important thing.

Richard Neudegg, head of regulation at uSwitch said: "This is not the full structural separation many of BT's retail rivals – including providers served by Openreach's network – have campaigned hard for.

"What it does is offer a middle ground that gives Openreach independence, while still being owned by BT. It is a step further than the functional separation that led to the creation of Openreach in the first place.

"The industry should now draw a line under the debate on the structure of Openreach, and focus on actually delivering the better service everyone wants to see. Most consumers won't be bothered whether or not 'a BT Group business' is written on the side of Openreach vans, what matters is the UK's digital infrastructure actually getting better in practice.

"Of course, the legal setup of Openreach won't solve some customers' frustration with broadband services alone. Ofcom needs to act across the board to ensure competition and service improvements. This includes universal service obligations, quality of service requirements on regulated products, sorting out industry switching processes and automatic compensation when providers fail to deliver."

Hannah Maundrell, editor in chief of money.co.uk, said: “This is definitely a step in the right direction and one I hope will eventually mean cheaper and better broadband for everyone. With the government’s pledge to get everyone online in this week’s Budget having a solid, able and independent party responsible for its roll out is imperative.

“Households deserve an affordable, reliable broadband connection and a choice of supplier wherever they live. Hopefully this move will take us closer to that being possible.”