BT and Openreach are now legally separate entities, Ofcom has confirmed today.
The voluntary agreement was made back in March 2017 after a significant negotiation period. By creating an independent governance structure and giving other providers more access to the Openreach UK network, the new deal aims to boost competition and fairness.
Openreach must now operate under a different regulation process from its former parent company BT, with its own employees and board under its new independent identity. BT branding has been removed from the company’s assets and 31,000 employees from the BT Group staff have been transferred to work under the new Openreach Ltd.
Openreach was the infrastructure division of BT Group, and is the company that owns, operates and maintains the majority of the UK's phone and broadband lines. The BT Openreach division, introduced in 2005, was formerly responsible for UK’s main telecoms network, which is the network Sky Broadband, TalkTalk, Vodafone and other telecoms providers use.
However, BT’s ownership of Openreach became concerning to Ofcom, who suggested that BT had been seeking to benefit its own business while hindering competitors. Complaints were made by rival companies, who suggested that BT had delayed the roll-out of broadband to other operators.
In 2016, Ofcom ruled that Openreach had failed to consult rival Internet Service Providers ‘sufficiently’ on ‘investment plans that affect them’ in future. Other operators wanted BT to replace the aging copper wire network, which cannot currently support nationwide demand. In 2017 Ofcom fined BT £42m after discovering the company "misused" a contract allowing it to reduce compensation payments to rival broadband providers for delays in laying new high-speed lines
MPs also claimed that BT had “significantly under-invested” in the Openreach network.
Ofcom have formally released BT from the 2005 arrangement, and the new, separate Openreach Ltd will be "legally required to make decisions in the interests of all Openreach's customers, and to promote the success of the company".
The new deal brings with it a demand for a widespread investment in “Fibre to the premises” (FTTP) pure fibre connection, which will offers speeds of up to 1Gbps to more providers and customers.
Openreach will also be subject to tougher minimum service quality standards, and will be expected to uphold greater consumer protection measures.
The chairman of Openreach, Mike McTighe, recently announced:
“Openreach now has its own Board, greater strategic and operational independence, a separate brand and an independent workforce – and we’re ambitious for the future.
We’ve set out a clear plan to invest in new, more reliable, future-proof broadband technology, and we’re right in the middle of our largest ever recruitment drive for 3,500 engineers – so it’s an exciting time to be part of Openreach Limited.
We’re determined to continue improving customer service, collaborating closely with our customers, and spearheading the national rollout of next generation broadband networks.”
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