BT under pressure from rivals after Ofcom Openreach ruling

BT Openreach worker and van
BT Openreach worker and van
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BT faced fresh flak yesterday after the one-time telecoms monopoly avoided a break-up of its Openreach broadband division.

The telecoms giant welcomed Ofcom proposals to make Openreach a “distinct company” within the group rather than face a full sell-off.

Rival operators such as Sky, TalkTalk and Vodafone have long called for a split between BT and the division that develops and maintains the UK’s main telecoms network used by phone and broadband providers.

Those firms pay to use the network and have previously complained over poor service and urged the group to replace its ageing network of copper wire.

BT chief executive Gavin Patterson said he was introducing “significant changes” to meet the concerns of Ofcom and the industry but accepted that broadband services could be “better”. He said 95 per cent of the UK would have high-speed internet provision by the end of 2017, and the group hopes to plug the 5 per cent gap by 2020.

Sky group chief executive Jeremy Darroch said: “Today’s proposal to create a legally separate Openreach is a step in the right direction, although falls short of the full change that would have guaranteed the world-class broadband network customers expect and the UK will need.

“In particular, leaving Openreach’s budget in the hands of BT Group raises significant questions as to whether this will really lead to the fibre investment Britain requires.

“At the end of the day, Ofcom’s changes will only work if they deliver better outcomes for customers.”

TalkTalk chief executive Dido Harding also described the move as “a step in the right direction” but warned that it could favour BT by allowing it to continue “gaming the system” of complex regulations – a claim denied by Patterson.

Consumer group Which? said customers would expect the shake-up to “deliver big improvements” in Openreach’s “woeful” service.

The proposals include making Openreach a legally separate company with its own board, including a majority of non-executive directors not affiliated to BT Group.

It also proposes greater consultation with customers on large-scale investments, its own staff working for Openreach, ownership of assets that it already controls, its own strategy and control over budget allocation, and independent branding.

Ofcom chief executive Sharon White 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.”

The industry watchdog is now seeking views on the plans by 4 October. The proposals come a week after MPs said that if BT does not ramp up investment in Openreach and address poor service, Ofcom should force it to split off the division.

Shares in BT closed up 12.2p or 3.2 per cent at 399.7p.