In February, Ofcom identified serious failings with BT’s ownership model of Openreach now it has outlined details of how an enhanced structural separation will work.
Ofcom said BT has an incentive to make these decisions in the interests of its own retail businesses, rather than BT’s competitors.
Ofcom iterated that Openreach should be a legally separate company within BT, saying all its directors would be required to make decisions in the interests of all Openreach’s customers. The new board should have a majority of non-executive directors, who should not be affiliated to BT Group in any way but would be both appointed and removed by BT in consultation with Ofcom.
Openreach’s chief exec should be appointed by the Openreach Board, with no direct lines of reporting from Openreach executives to BT Group.
Openreach will also be obliged to consult formally with customers such as Sky and TalkTalk on large-scale investments which is something that BT was not happy to do during its G.Fast roll-out plans.
Sharon White, Ofcom’s Chief Executive, 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 moves are designed to ensure that Openreach acts more independently from BT Group, and takes decisions for the good of the wider telecoms industry and its customers. “If it cannot achieve this, Ofcom will reconsider whether BT and Openreach should be split into two entirely separate companies, under different ownership,” said the regulator.
Ofcom said BT has notified it of plans to deliver changes to Openreach’s governance, to make it more independent and accountable to its customers. “We welcome BT’s acknowledgement of the need to reform Openreach, and elements of BT’s proposal.