Ofcom: BT agrees to legal separation of Openreach

Ofcom announced this morning that BT has agreed to its requirements for the legal separation of Openreach, its network division (more background on this here). This was a key recommendation from Ofcom’s Strategic Review of Telecommunications undertaken in 2015-16.

Last month the media reported that the Government was urging Ofcom and BT to settle the dispute to avoid further delays; in November 2016 Ofcom announced it would proceed with a formal notification to the European Commission to require the legal separation of Openreach from BT, after BT failed to offer voluntary proposals that addressed Ofcom’s competition concerns.

Today’s announcement means that Ofcom will no longer need to impose the required changes through regulation. Openreach will be incorporated as a legally separate company within BT Group, together with its own strategy and a legal purpose to serve all of its customers equally.

Details of the new agreement include:

• Openreach will have control of assets such as the physical access network and the Openreach Board will make decisions on building and maintaining these assets: BT will hand these powers to Openreach, while retaining a title of ownership.
• Openreach will be obliged to consult formally with customers such as Sky, TalkTalk and Vodafone on large-scale investments. In future, there will be a ‘confidential’ phase during which customers can discuss ideas without this being disclosed to BT Group.
• BT will be removed from Openreach branding to reflect these changes and the company’s greater independence.