BT announces voluntary agreement to legally separate from Openreach

BT announces voluntary agreement to legally separate from Openreach

Ending a long period of negotiations with Ofcom, BT announced today its voluntary agreement to legally separate from Openreach. Ofcom confirmed that “it will no longer need to impose these changes through regulation” as initially proposed last year and welcomed BT’s decision. This is a significant reform for the BT Group as Openreach will now become a distinct company with its own staff, brand and Board which will be able to make independent decisions on strategic investments affecting other telecoms providers.

The Digital Communications Review, which concluded in July 2016, led Ofcom to propose a legal separation of Openreach, the infrastructure arm of BT, in order to deliver better quality of service and increase investment. Gavin Patterson, BT Chief Executive, said: “I believe this agreement will serve the long-term interests of millions of UK households, businesses and service providers that rely on our infrastructure. It will also end a period of uncertainty for our people and support further investment in the UK’s digital infrastructure.”

Although the legal separation does not go as far as the full structural separation that some industry members called for years ago, it is however an unprecedented step for the BT Group in addressing criticism and competition concerns raised by Ofcom. It is crucially a safer option than a forced structural separation which could have led to a potential lengthy legal scrutiny, delaying operators’ investment decisions in deploying new broadband technologies.

Responding to the news this morning, Sky stated that “this is a welcome step that we have long called for on behalf of our customers. A more independent Openreach is a step towards delivering better service to customers and the investment that the UK needs. It’s important that today’s agreement is now implemented by BT in good faith and without delay.”

TalkTalk Chief Executive Dido Harding also welcomed the news, hoping that “this is the start of a new deal for Britain’s broadband customers, who will be keen to see a clear timetable from Openreach setting out when their services will improve”.

 

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