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BT avoids break-up of Openreach broadband

Posted on Jul 26, 2016.

Ofcom has decided that BT’s Openreach, the division which runs UK’s broadband infrastructure is to become a distinct company within the BT Group.

The media watchdog has resisted the call from campaigners to split Openreach completely claiming that this will allow consumers that are directly impacted broadband troubles a much faster resolution to their problems. Ofcom has also said its plans would ensure the most independence from BT without the costs of a full break-up.

Ofcom boss Sharon White told the BBC, "More people will receive faster, more reliable broadband as a result of the changes and the plans can be introduced within months, rather than the years that a sell-off would involve” White has called this the "biggest shake-up to Openreach in its 10-year history”, and has said the changes would ensure the broadband network is run in the interests of the UK not just BT.

Campaigners have said the changes could not come soon enough for the millions of people who have suffered "woeful levels of service from Openreach".

The ruling by Ofcom will mean that Openreach will become a legally distinct company with its own board, branding and control over its budget allocation. It is planned that 95% of the country will have high-speed internet by the end of 2017 and the remaining 5% by the end of 2020.

Gavin Patterson, BT’s Chief Executive accepted that BT’s Openreach services could be better and that this ruling affecting a service provided to a network that covered 30 million customers, was the sensible way forward.

Rivals to BT have raised concerns that Openreach run a complex web across the UK, they run the wires and cables for the UK's telecoms network and its clients include Sky and Talk Talk and  that new rules made by Ofcom will leave the budget of Openreach still in the hands of BT. Furthermore, rivals are concerned that this will lead to a complex web of regulation.

Ofcom has confirmed that it has been made clear to BT that they still have the power to enforcing further changes and a spokesman for the government's Department of Culture, Media and Sport has said that a full split still remains an option.

Campaigning consumer group Which? have said consumers will expect to see big improvements.

The regulator will now consult on its plans until 4 October.

Business Assessment

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