BT and Openreach officially ordered to split

It’s official: Openreach and BT must split into two legally separate companies, Ofcom has ordered. Plans to do so were originally announced back in October, though for some time it was still open to other proposals.

However, the regulator says BT has failed to sufficiently address its "competition concerns", so it's proceeding with a formal notification to require BT and Openreach to separate.

Although the two will be distinct companies, Openreach is still allowed to be a part of the wider BT Group, albeit with its own board of directors.

A number of telecoms companies - including Sky and TalkTalk - have called for Ofcom to be off split entirely, however. They believe that as long as the same firm is controlling both the country's telecoms infrastructure (Openreach) and its own retail arm (BT), there will be problems.

As part of its consultation into the matter, Ofcom says it received around 90,000 form responses from the public asking for full structural separation.

In response, it said: "Structural separation could generate materially greater costs and risks compared to models based on legal separation… Structural separation is the most intrusive form of regulatory intervention available."

Since the announcement, Openreach has already begun its separation process, appointing Mike McTighe as its first ever chairman.

McTighe said: "Openreach is at the heart of the digital economy and I am thrilled to take up this important role. A great deal has been achieved over the past decade but it is clear that Openreach needs to up its game on service and regain the trust of the people we serve in the industry and across the UK."

Not a bad start, really.

Still, other telecoms providers aren't happy. TalkTalk CEO Dido Harding said: "Openreach has been letting consumers down for far too long, unable to meet promises of even minor improvements and becoming a household name for all the wrong reasons.

"However, we welcome the fact that the regulator has finally made a decision, and while we do not think legal separation goes far enough to deliver the broadband consumers deserve, they are at least a step in the right direction."

Independent bodies in the industry agree, but are a little more damning towards providers. Fiona Keenanm, a director at Kantar Worldpanel, commented: "The proposed reforms should go far in fostering a more consultative, transparent approach to infrastructure development, as well as increasing investment... The likes of Sky and TalkTalk have long been using the problematic status of Openreach as a free pass to explain their own shortcomings, but that's not the whole story. Whether ultimately we'll see cheaper and faster broadband for the general public remains to be seen."

Source: Ofcom

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