(Image Credit: iStockPhoto/DNY59)
After failing to reach an acceptable agreement on Openreach’s future while it remained under BT’s control, regulator Ofcom has concluded it is time for the subsidiary to be separated and run independently. The aim is to boost competition, encourage innovation and ensure fair treatment across the market.
Many internet service providers that rely on the Openreach network have long demanded this change, arguing that Openreach gave BT preferential treatment that created an uneven playing field. As the operator of the UK’s largest communications network, Openreach has a duty to provide impartial access to all providers and customers.
“We are disappointed that BT has not yet presented proposals that fully address our competition concerns,” Ofcom said in its report. “Some progress has been made, but it has not been sufficient, and action is required now to secure better outcomes for phone and broadband users.”
Ofcom first raised concerns about Openreach in July and set out reform proposals, but after judging BT’s responses inadequate, the regulator has moved forward with plans to separate the business.
BT expressed disappointment at the decision and noted it has appointed the first chairman of Openreach to oversee 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 remain in discussions with Ofcom on two outstanding issues: the reporting line of the Openreach chief executive and the form of legal incorporation.”
The newly independent Openreach will be expected to treat all its customers equally, including major providers such as Sky, TalkTalk and Vodafone. The wider industry has largely welcomed the decision, arguing it should deliver meaningful improvements for consumers.
“Openreach has been letting consumers down for far too long, failing to deliver even modest improvements and earning a poor reputation for the wrong reasons. We welcome the fact that the regulator has finally made a decision. While we believe full separation may still fall short of what consumers deserve, it is at least a step in the right direction,” said Dido Harding, CEO of TalkTalk.
Do you welcome the decision to split Openreach from BT? Share your thoughts in the comments.