Ofcom has decided to allow BT to retain full ownership of its Openreach network division, but says it must be split off into a legally separate business with its own management, staff and board.
Today’s announcement follows a lengthy review into the UK’s telecom sector which was instigated, in part, by concerns over Openreach’s performance and impartiality.
The business manages the UK’s biggest phone and broadband network which is used by BT, Sky, TalkTalk and many smaller firms to provide telecoms services to business and residential customers.
TalkTalk and Sky say Openreach favours BT’s retail business when developing new products and claim that BT underinvests in the network by building new services around the existing copper infrastructure.
BT rejects such claims and says that by using existing assets alongside new technologies it can deliver faster broadband speeds to end-users more quickly.
Ofcom says separating Openreach from the rest of the BT Group will allow it “to develop its own strategy and annual operating plans,” although any spending limit would still be set by the BT Group board.
The new business would need to consult customers such as Sky and TalkTalk about any major investment plans and adopt its own brand “to help embed the organisational culture of a distinct company.”
Sharon White, Ofcom Chief Executive, said: “We’re pressing ahead with the biggest shake-up of telecoms in a decade, to make sure the market is delivering the best possible services for people and business across the UK.”
Sky, which had called for BT to be forced to fully dispose of Openreach, said today’s announcement “falls short of the full change that would have guaranteed the world-class broadband network customers expect and the UK will need.”
CEO Jeremy Darroch added: “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.”
BT says its ready to make changes to Openreach’s governance, including appointing a new board, consulting stakeholders and delegating spending power, in order to make the business “more independent and transparent than it is today.”
CEO Gavin Patterson said: “Openreach is committed to delivering better service, broader coverage and faster speeds and these changes will enable it to do just that.”
However BT says Ofcom’s plans to transfer assets to a newly incorporated subsidiary company would involve “extensive, disproportionate costs” and create “years of uncertainty” about Openreach’s future which would undermine its ability to invest in new infrastructure and upgrades.
Ofcom’s proposals are subject to a mandatory consultation which closes on October 4th.