Ofcom wants to split up BT and Openreach

Back in July, UK communications regulator Ofcom set its sights on BT and ordered the ISP to make itself more independent from Openreach. At first, BT complied and said that it would work on addressing these complaints but in the time since then, little has been done, forcing Ofcom to kick things up a notch and could force a legal split of BT and Openreach.

Today, Ofcom has said that Openreach and BT should be split apart over competitive concerns. In a statement, Ofcom has said that “formal notification to require legal separation” of BT and Openreach after the former failed to address previous concerns voluntarily.

“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.”

“Our proposal requires Openreach to become a distinct company with its own Board. This would comprise a majority of non-executive directors, including the Chair, who are not affiliated with BT. Openreach would be guaranteed greater independence to make decisions on strategic investments, with a duty to treat all of its customers equally.”

This decision comes down to the fact that BT operates its own retail outlet in addition to Openreach. This gives BT an incentive to favour its own retail business when making strategic decisions, rather than Openreach, which other ISPs in the UK rely on to connect customers to the web. These include some of BT's biggest competitors like Sky and TalkTalk. If Openreach is split off from BT, it would have greater control over things like infrastructure upgrade plans and rollouts, which would benefit many ISPs, not just BT.

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KitGuru Says: While we are still some ways off from BT and Openreach being split apart, it is clear that Ofcom wants this outcome in the long run. If successful, this could have quite the impact on UK Internet providers going forward. Do you guys think BT should no longer be in control of Openreach?

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