Openreach to become separate firm in BT-Ofcom deal

File photo dated 26/01/16 of a BT Openreach internet router, as the company has been told it must open up its Openreach network to competitors after regulator Ofgem concluded the UK must "do better" at rolling out superfast broadband and 4G mobile. PRESS ASSOCIATION Photo. Issue date: Thursday February 25, 2016. See PA story CONSUMER BT. Photo credit should read: Gareth Fuller/PA Wire.
Andrew Madden

TELECOMS giant BT has reached an agreement with Ofcom to legally separate from its infrastructure arm Openreach.

The company has faced growing calls from rivals to fence off the branch and in November the communications regulator ordered a legal separation of the firm.

After months of negotiations, yesterday the pair said they have reached agreement on a "long-term regulatory settlement that will see Openreach become a distinct, legally separate company with its own board, within the BT Group".

Around 32,000 employees will transfer to the newly formed Openreach Limited following a Transfer of Undertakings consultation and after pension arrangements are in place.

Under the terms of the deal, Openreach Limited will have its own branding that will not feature the BT logo.

BT employs more than 3,000 workers across the whole of Ireland, however it does not have an Openreach arm in the region.

An Ofcom spokesperson said that it will no longer need to impose any changes through regulation as BT has agreed to all of the measures needed to address its competition concerns.

The infrastructure arm builds and maintains the millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK and has been in operation since 2006.

Ofcom boss Sharon White called it a "significant day" for phone and broadband users and pledged to "carefully monitor" how the new Openreach performs.

Under the agreement, the Openreach chief executive will report to the company's chairman, with accountability to the BT Group chief executive, however they will remain independent.

Mairead Meyer, managing director of BT Northern Ireland Networks said that, while Openreach does not operate in the north, their processes here "reflect those of Openreach".

"We are pleased that Ofcom has confirmed that this arrangement has generally worked well and it wants to protect these benefits to Northern Ireland and strengthen the current arrangements to reflect today's agreement," she said.

"Therefore, Northern Ireland will continue to have a regulatory model that will retain the integrated nature of the BT NI Networks organisation and it will continue to supply products on behalf of Openreach and BT Wholesale and Ventures in Northern Ireland.

"BT has made a commitment that there will be some reforms to how BT works in Northern Ireland including greater independence, confidentiality and independent branding."

Scott Ritchie, managing director of Connect Telecom, one of Northern Ireland's largest business telecoms providers said the news was excellent for customers and independent telecoms companies, who have "challenged the might of the BT".

"This is a significant milestone in telecoms history as it crushes the millstone which has been hampering the growth of independent telecoms providers," he said.

Since its inception, BT's has been accused of running a monopoly through Openreach and abusing its market position by not delivering adequate broadband speeds.

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