BT announces Openreach split details

BT announces Openreach split details

Following Ofcom’s imposed separation of BT and Openreach in late 2016, BT have agreed to all the terms put forward by Ofcom and announced their plans for the legal separation of its network division.

 

Rivals such as TalkTalk, Sky, Vodafone, Three, FCS and Gamma had all claimed that BT had given its own business and consumer arms cheaper wholesale rates than its rivals and slowed the rollout of new services to other companies –  stunting competition and stinging consumers and businesses with increased cost.

 

The agreement made between Ofcom and the BT Group will see 32,000 staff transfer to Openreach once issues with pensions agreements are resolved. Though Openreach will not use the BT branding and will have its own independent board of directors, it will remain within the BT Group, with the Openreach CEO Clive Selley reporting in to Openreach chairman Mike McTighe who will still be accountable to BT Group CEO Gavin Patterson.

 

Ofcom CEO Sharon White, described the move stating, 'This is a significant day for phone and broadband users. The new Openreach will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry – not just BT.

 

'We welcome BT’s decision to make these reforms, which means they can be implemented much more quickly. We will carefully monitor how the new Openreach performs, while continuing our work to improve the quality of service offered by all telecoms companies.

 

BT Group CEO Gavin Patterson agreed, stating, ‘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. 


‘This has been a long and challenging review where we have been balancing a number of competing interests. We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future.’

 

Market reacts

 

‘ BT’s rivals, notably Sky and TalkTalk, will publically claim that the regulator should have gone further by enforcing a full structural separation. However, this option was always the most radical and controversial the regulator could have taken. In private they should be more than satisfied with the changes Ofcom has pushed through.’ – Kester Man, Principal analyst, Operators, CCS Insight

 

This is a good day for the average broadband, TV and phone customer too, who will enjoy all the benefits the stoking of competition in a fairer marketplace is likely to bring, without suffering the costs and delays to infrastructural rollout a full separation would have incurred. We should not, however, rule out a full separation happening at some point in the future.’ – Dan Howdle, consumer telecoms expert at Cable.co.uk

 

'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.' - Sky spokesperson 

 

'While long overdue today’s decision is excellent news for consumers and independent telecoms companies, such as Connect, who have challenged the might of the BT. This is a significant milestone in telecoms history as it crushes the millstone which has been hampering the growth of independent telecoms providers. The legal entanglement of BT from Openreach will ensure a better service for consumers and will be welcomed in rural economies across Northern Ireland and Scotland, who have witnessed a lack of funding by BT due to its ongoing focus on cities.' - Scott Ritchie, MD of Connect Telecom

 

'We believe it is the first step is in the right direction.  However we remain convinced that – as both Ofcom and the DCMS Select Committee independently concluded -- the only sustainable and truly customer-responsive Openreach is an Openreach which is fully master of its own destiny, structured and managed as a utility company and completely structurally separate from BT. 

'Nonetheless Industry needs pragmatic solutions to move forward.  We’re therefore pleased that CPs and Openreach are not, now, facing a lengthy period of procrastination and uncertainty. 

'FCS believes as an industry we need to ensure that the newly constituted Board reflects the desire and aspiration of all Openreach stakeholders and customers. We therefore call open Openreach, Ofcom and Government to take the next step to create a truly inclusive governance structure and arrangements to allow all Industry stakeholder constituencies to be part of an inclusive and equitable investment decision making process.  FCS is ready to play our part in this proposed governance structure to ensure the development of effective competition and quality networks for the benefit of all customers and stakeholders.' - Chris Pateman, CEO of Federation of Communication Services

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