Openreach to be separate BT Group company, Ofcom says

After its full consultation, Ofcom says that Openreach does not need to be split off from BT entirely - but it should be a distinct company within the BT Group, complete with its own board of directors.

It comes as a disappointment to other broadband providers who called for Openreach to be totally independent from BT, though they say it's a "step in the right direction" and it'll mean a more transparent company.

Here's what Ofcom says should happen.

  • Openreach should become its own distinct company, but still within the BT Group.
  • It should have its own board of directors who are not affiliated to the BT Group, who are also in charge of appointing Openreach's Chief Executive.
  • Openreach should consult more with customers and clients.
  • Staff who work for Openreach should be employees of the new company, not the BT Group.
  • Openreach should have ownership over the assets it controls - i.e. the physical broadband network.
  • Openreach should control and develop its own budget, though the overall budget will be set by the BT Group.
  • Openreach should have its own distinct branding to separate it from the BT Group.

This all means it'll start to act more like other companies within the BT Group - like Plusnet or EE.

Ofcom also ordered that BT Group ought to invest more in Openreach's fibre networks to help improve the UK's infrastructure.

BT seems relieved with the decision, and pleased that it doesn't have to say goodbye to Openreach altogether. In a statement, it said that Openreach will now be "more independent and transparent", and that it plans to work with Ofcom to make the decision work.

Gavin Patterson, chief executive of BT Group, said: "We have listened to Ofcom and industry and are introducing significant changes to meet their concerns… Openreach is committed to delivering better service, broader coverage and faster speeds and these changes will enable it to do just that. Our proposals can form the basis for a fair and sustainable regulatory settlement."

Other providers, however, are a little less thrilled. Jeremy Darroch, group chief executive for Sky - which uses the Openreach network for its broadband services - said the ruling was "a step in the right direction," but falls short of what they really wanted.

"In particular, leaving Openreach's budget in the hands of BT Group raises significant questions as to whether this will really lead to the fibre investment Britain requires," he said.

TalkTalk feels the same way. CEO Dido Harding raised concerns about technically leaving Openreach in the hands of BT, saying that a full structural separation would be "cleaner, with less red tape - and removes BT's ability to exploit loopholes in the regulation."

For now, this is just a consultation and not the absolute final decision, but it looks pretty likely to come to fruition. Ofcom is seeking views on the plan it's outlined before 4 October.

Source: Ofcom

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