Who are Openreach?
Openreach owns the pipes and cables that connect the majority of homes and businesses in the UK to the national broadband and phone networks. It is owned by BT.
What was the issue?
BT was accused of abusing the monopoly by underinvesting in the broadband infrastructure and charging over the odds for services. There were ongoing calls for the regulator Ofcom to force a split between Openreach and BT.
What happened?
Eventually Ofcom announced that BT would legally separate from its Openreach subsidiary, describing it as a “significant day” for consumers.
Openreach will soon become a distinct company with its own staff and management. Ofcom says the new Openreach will have “its own strategy and a legal purpose to serve all of its customers equally”.
However, it isn't a full structural split. Openreach will have as much independence from BT as possible, without incurring delays and disruption which is why it is being described as a “legal separation”.
BT’s Openreach Board will continue to head up the company under a “new governance agreement”. The majority of Openreach Board directors are independent from BT. Openreach’s Chief Executive will be appointed by, and accountable to, the Board. BT will be able to veto the CEO appointment, but only on notification to Ofcom. The company is also going to be “obliged” to consult with other providers about major investments.
How did the channel react?
Andrew Dickinson, MD Jola Cloud Solutions and former MD of Griffin Internet had this to say; “Ofcom should be applauded for removing the influence of BT Group which has so far kept Openreach’s fibre roll-out away from business areas to protect their legacy leased line base. However, Openreach will still have a virtual monopoly on the local loop and it is monopolistic inefficiencies that have made for a non-responsive company with a very poor delivery record. Ofcom penalties will introduce artificial accountability but real competition is the antidote and infrastructure must be made available to other operators at a comparable cost."
To find out more about how this legal separation with affect your business contact Jola.
