29.11.16
Ofcom orders Openreach to legally split from BT
BT has been ordered to legally separate from Openreach, its troubled broadband infrastructure programme, by regulator Ofcom.
The Culture, Media and Sport Select Committee raised the possibility of a separation in July, when it published a report criticising Openreach for failing to reach remote areas and thwarting other networks’ provider planning.
Ofcom initially rejected calls for the legal separation of Openreach from BT, but has now announced that it will issue orders for Openreach to become a distinct company.
The regulator noted that it was “disappointing” that BT had failed to meet its recommendations regarding concerns that it was able to favour its own business while operating the network.
Ofcom said it would now notify the European Commission of its intention to introduce a separation, but remained open to proposals from BT that would address its concerns.
It had chosen legal separation, rather than structural separation where BT and Openreach would become entirely separate companies, because it feared structural separation “could generate materially greater costs and risks”.
“Our current view is still that an effective and robust form of legal separation, with Openreach as a wholly-owned subsidiary of BT, is likely to achieve the greatest improvements for everyone in the shortest amount of time,” the regulator said.
“Therefore, this is the approach with which we are minded to proceed.”
It added that it would scrutinise Openreach board decisions to ensure that they are made without undue influence from BT.
Yesterday, BT appointed Mike McTighe - who was on the board of Ofcom between 2007 and 2015 - as the first chair of Openreach.
The company released a statement saying: "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.”
(Image c. BDUK)
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