BT must legally split from its Openreach division, Ofcom ruled this morning.
After nearly two years of hard debate, Ofcom will now appeal to the European Court of Commission for support in separating the two entities. This is because BT failed to address the competition concerns Ofcom released back in July, the regulatory authority have claimed.
The national telecoms network is run by Openreach, which was inherited by BT after their privatisation. As well as BT’s own users, it provides broadband for TalkTalk, Vodafone and Sky customers. Despite calls from rivals to split off Openreach entirely, it appears that Ofcom are only seeking a legal separation at this stage.
While the network division would still be under BT’s control, this would mean the telecoms giant would lose a great deal of control over Openreach’s finances.
Ofcom want Openreach to have its own board that is unaffiliated with BT and their business interests. The regular also said that Openreach would have a duty to treat all of its customers equally.
A statement from Ofcom read: “We are disappointed that BT has not yet come forward with proposals that meet our competition concerns. Some progress has been made, this this has not been enough, and action is required now to deliver better outcomes for phone and broadband users.”
It’s been a busy week for industry regulations and the broadband sector. Just yesterday Ofcom announced an investigation had been launched into Plusnet for billing users ‘after their services had been cancelled’.
In a response to today’s ruling, 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.”