Ofcom: Openreach to become independent company within BT

BT UK
British telecom regulator Ofcom today announced plans for making Openreach an independent company within BT.

There should be more choice of broadband networks, including fiber connections to homes and offices. The quality of service should be enhanced across the whole industry. Broadband and mobile coverage for people and businesses should be enhanced, said Ofcom.

Sharon White, Ofcom Chief Executive, said: “We’re pressing ahead with the biggest shake-up of telecoms in a decade, to make sure the market is delivering the best possible services for people and business across the UK.”

Openreach is the part of BT Group that develops and maintains the UK’s main telecoms network used by telephone and broadband providers such as Sky, TalkTalk, Vodafone and BT Consumer. Openreach has obligations to offer the same products to all customers on the same terms, said Ofcom.

Openreach should be a separate company within BT Group, with its own Articles of Association, and its directors would be required to make decisions in the interests of all Openreach’s customers, and to promote the success of the company.

The new Board of Openreach should have a majority of non-executive directors, including the Chair. These non-executives should not be affiliated to BT Group in any way, but would be both appointed and removed by BT in consultation with Ofcom.

Openreach’s Chief Executive should be appointed by, and accountable to, the Openreach Board – not BT Group. The Chief Executive would be responsible for other executive appointments. There should be no direct lines of reporting from Openreach executives to BT Group, unless agreed by exception with Ofcom.

Openreach would be obliged to consult formally with customers such as Sky and TalkTalk on large-scale investments. There should be a ‘confidential’ phase during which customers can discuss ideas without this being disclosed to BT Group.

People who work for Openreach should be employees of the new company, rather than BT Group. This would prevent any real or perceived conflict of interest, and allow Openreach to develop its own distinct organisational culture.

Openreach should own its physical network. This would allow Openreach to make decisions that depend on investing in, and looking after, Openreach’s assets. There may be costs in transferring assets or people to Openreach, which would need to be mitigated.

Openreach should develop its own strategy and annual operating plans, within an overall budget set by BT Group.

Openreach should have its own brand, not affiliated with BT Group, to help embed the organisational culture of a distinct company.