• Ofcom announces plans to force a legal separation of Openreach

        • Ofcom has today announced that it is proceeding with a formal notification to require the legal separation of Openreach from BT, after BT failed to offer voluntary proposals that address Ofcom’s competition concerns.

          Openreach is the division of BT Group that develops and maintains the UK’s main telecoms network used by providers such as Sky, TalkTalk, Vodafone and BT’s retail business.

          Ofcom is pressing ahead with its plans to improve broadband and telephone services for people across the country, pursuing better service quality and encouraging greater investment in networks. Creating a more independent Openreach, which works in the interest of all providers, not just BT, is said an important part of achieving this.

          Ofcom commented that, ‘we are disappointed that BT has not yet come forward with proposals that meet our competition concerns. 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.’

          In July, Ofcom set out its competition concern that BT has the incentive and ability to favour its own retail business when making strategic decisions about new network investments by Openreach. This concern arose because BT runs the national network, Openreach, as well as its own retail business. Proposed reforms were then put in place to address this structural issue, to provide regulatory clarity and confidence to the industry. The outcome that a more independent Openreach would be well placed to invest in ‘full fibre’ broadband for everyone, was then reached.

          Ofcom stated, ‘our proposal requires Openreach to become a distinct company with its own Board. This would comprise a majority of non-executive directors, including the Chair, who are not affiliated with BT. Openreach would be guaranteed greater independence to make decisions on strategic investments, with a duty to treat all of its customers equally.’

          Commenting on today’s news, Jaime Fink, Co-Founder at Mimosa Networks said, “despite Ofcom’s proposal, the infrastructure problems facing the UK market that prevent the rollout of a nationwide next-generation broadband network still remain. The DSL (cable) foundations that underpin much of the UK’s broadband network simply do not offer the bandwidth and reliability to support today’s internet applications and meet the demands of tomorrow’s increasingly data rich services. The roll-out of fibre also continues to present challenges in rural and dense urban areas. Openreach and other UK service providers must change their approach and look at new technologies that can profitably deliver a superfast sustainable broadband network.”

          Ofcom is now preparing to notify the European Commission of its intention to implement these plans, requiring the legal separation of Openreach to make it more independent.

          Ofcom has published the non-confidential responses to its July consultation on Openreach. These responses reflect a wide range of views from around 94,000 people via an online campaign. To read, click here.

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