BT avoids Openreach breakup but Ofcom orders more investment


BT will not have to sell off its Openreach broadband division despite concerns that it has been starved of investment and provides a poor quality of service, reports The Guardian.

The media regulator, Ofcom, has instead ordered BT to give more independence and investment powers to Openreach.

Ofcom said Openreach should be run as a legally separate company within BT Group, with its own board and its own brand. The regulator’s chief executive, Sharon White, said the alternative choice of forcing BT to sell the division – as demanded by its rivals – would take too long.

“This is a practical plan that can be implemented within months, unlike a sell-off of Openreach which would take years,” White told the Today programme on BBC Radio 4.

White added that making Openreach a legally separate company within BT will require it to act in the best interests of all broadband customers in the UK and not just BT customers.

BT’s rivals – Sky, Vodafone and TalkTalk – argue that the company drags its heels on opening its network to their engineers, which stymies their ability to offer homes superfast broadband access. White said this will no longer be the case.

“This could bring about significant change. It will mean you have faster, more reliable broadband. It will mean engineers turning up on time and getting the job done first time. And crucially for the UK it will mean more investment in fast fibre to the doorstep.”

White added that only 2 per cent of the UK received ultrafast broadband, delivered via fibre optic cable, compared with 70 per cent in Japan and 60% in South Korea. She said: “I don’t think that’s good enough.”

However, the regulator is likely to come in for criticism. As well as commercial rivals calling for action, a select committee of MPs last week said Ofcom should consider an Openreach breakup, unless BT spent more more money on the service.

BT has been accused of leaving millions of people with substandard broadband connections because of a failure to invest. Ofcom has agreed that BT needs to make its network available more easily but has decided that full-blown separation will take too long due to complications such as land contracts and pension arrangements for employees within Openreach.

Under the regulator’s plans, Openreach would be obliged to consult formally with customers such as Sky and TalkTalk on largescale investments.

BT’s chief executive, Gavin Patterson, will not receive feedback on those discussions in order to ensure that Openreach makes impartial decisions on investment, White said. Ofcom said it was seeking views on the plans by 4 October.