BT and Openreach, which installs and maintains much of the UK's broadband infrastructure, will become legally separate entities. The move to make Openreach a distinct company is the "biggest reform of Openreach in its history," according to Ofcom.
Ahead of BT's decision, Ofcom had threatened to use its legal force as a watchdog to address competition concerns through regulation. Such regulation and reforms are now not needed. Openreach will have its own staff and management, together with its own strategy and a legal purpose to serve all of its customers equally. To help smooth the transition for the workforce pension rights will be wholly transferrable.
Ofcom Chief Executive, Sharon White, called today "a significant day for phone and broadband users". She said the new independent company would "serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry – not just BT". White thought that reforms could complete more quickly as BT had decided to go ahead with them, rather than being forced to comply. Ofcom will still monitor how Openreach performs, and Openreach will be under scrutiny to make sure it strives to fulfil its agreed duties.
Last year the status of the relationship between BT and Openreach seemed to be highly uncertain as in February Ofcom recommended that the pair should not be split, then it July Ofcom pushed for major reform. Late last year Ofcom seemed to be frustrated with BT's response to its reform plans, so it decided to push for a legal separation of BT / Openreach.
HEXUS received a comment on the above news from Sky. A Sky spokesperson welcomed the separation as it would bring better customer service and investment. "It's important that today's agreement is now implemented by BT in good faith and without delay," concluded the spokesperson.