Ofcom decides it's time for BT and Openreach to split

(Image Credit: iStockPhoto/DNY59)

After failing to reach a satisfactory agreement over the future of Openreach under BT's management, regulator Ofcom has decided it's time for the subsidiary to be split from its owner and operated independently to promote innovation and fairness in the market. 

Many ISPs who make use of the Openreach network have long called for the measure after claims Openreach prioritised BT over rivals to give the company an unfair advantage. As the owner of the UK's largest network, Openreach has a responsibility to provide fair and equal access to all customers. 

"We are disappointed that BT has not yet come forward with proposals that meet our competition concerns," wrote Ofcom in a report. "Some progress has been made, but this has not been enough, and action is required now to deliver better outcomes for phone and broadband users." 

Ofcom first voiced its concerns about Openreach back in July and offered reform proposals, but the regulator has now decided to go ahead with splitting the company after deciding BT did not do enough to alleviate concerns. 

BT said it was disappointed with the decision and had just appointed the first chairman of Openreach to oversee its operations going forward. In a statement, the company said: "We put forward proposals in July that we believe are fair and sustainable, and that meet Ofcom's objectives without disproportionate costs." 

"We are implementing these proposals, and have just appointed Mike McTighe to be the first chairman of Openreach. We are in discussions with Ofcom on two outstanding issues, the reporting line of the Openreach chief executive and the form of legal incorporation." 

A new and independent Openreach will need to treat all of its customers, including the likes of Sky, TalkTalk and Vodafone, equallyThe decision has been met with almost resounding welcome from the rest of the industry who believe it will lead to significant improvements for consumers going forward. 

"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, it is at least a step in the right direction," comments Dido Harding, CEO of TalkTalk. 

Do you welcome the decision to split Openreach from BT? Share your thoughts in the comments.

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Chelsfield Solutions
28 Dec 2016, 9:01 p.m.

I work as a senior consultant advising London based clients on matters related to Telecommunications and infrastructure. With more than thirty years within the industry and dealing with BT and Openreach weekly at the 'coal face' so to speak this matter is complex. One needs to take an in depth look at market trends, economic viability and support structures surrounding the provision of services.