Broadband: Ofcom orders legal split of BT and Openreach

An Openreach engineer surveying on the causeway to Holy Island as part of the iNorthumberland programme.
An Openreach engineer surveying on the causeway to Holy Island as part of the iNorthumberland programme.

The regulator Ofcom has today announced that BT must be legally separated from Openreach, which runs the UK’s broadband infrastructure.

A statement from Ofcom said: ‘We are disappointed that BT has not yet come forward with proposals that meet our competition concerns. Some progress has been made, but this has not been enough, and action is required now to deliver better outcomes for phone and broadband users.’

The telecoms regulator added that it is preparing to notify the European Commission of its intention to implement these plans, ‘requiring the legal separation of Openreach to make it more independent. Throughout this process, we remain open to BT bridging the gap between its proposal and what is required to address our strong competition concerns’.

In a statement, BT said: ‘We put forward proposals in July that we believe are fair and sustainable, and that meet Ofcom’s objectives without disproportionate costs.

‘We are implementing these proposals, and have just appointed Mike McTighe to be the first chairman of Openreach. We are in discussions with Ofcom on two outstanding issues, the reporting line of the Openreach chief executive and the form of legal incorporation.

‘We will continue to work with Ofcom to reach a voluntary settlement that is good for customers, shareholders, employees, pensioners and investment in the UK’s digital future.’

The news has been welcomed by Berwick MP Anne-Marie Trevelyan, who said: “I am delighted Ofcom has made this long-overdue ruling.

“It is a shame that it must seek permission from the European Commission on a matter relating to national broadband, but I hope they will agree this split is the right thing for consumers.

“Openreach should be acting in the interests of customers and their needs, rather than those of BT’s board. Openreach has so far received £1.7billion in taxpayer subsidies to connect harder-to-reach areas of the UK to superfast services, but has repeatedly failed to deliver, particularly here in Northumberland.

“I will continue to do all I can to campaign for a better deal for consumers and I welcome Ofcom’s final proposals on how to tackle this monopoly which is not acting in the best interests of customers.”

In January this year, Mrs Trevelyan called for an end to BT’s ‘broadband monopoly’. The Tory MP co-signed a report, BroadBad, from the cross-party British Infrastructure Group (BIG) of MPs, which called on the regulator Ofcom to take radical action over the ‘natural monopoly too long enjoyed by BT Openreach’.

However, the company hit back, citing its efforts to equip rural areas. At the time, a BT spokeswoman said: “In excess of 70 per cent of households in the Berwick-upon-Tweed constituency have already been upgraded and this will increase to more than 90 per cent by the end of the current plans.”

Then in July, a committee of MPs said that BT is ‘significantly under-investing’ in Openreach, warning that it should put its house in order or face a full split between Openreach and BT Group.

A statement from BT at the time read: ‘We’re disappointed to be criticised, having invested more than £1billion a year in infrastructure when the UK was emerging from recession and rival companies invested little. As the report acknowledges, BT’s investment has made the UK a broadband leader among the major economies in Europe.’