After months of negotiation and uncertainty, communications regulator, OFCOM, today announced it had come to an agreement with BT on the structure of its relationship with BT Openreach.
This issue has been a hot topic in parliament and in the Culture Media and Sport select committee for many months and centred around whether customer service standards and investment decisions of BT’s broadband arm (BT Openreach) would be best served by: splitting the company up; keeping it together; or something in between.
OFCOM has gone for the middle way option of ‘functional’ as opposed to full ‘physical’ separation and will require BT to set up BT Openreach as a separate legal entity with a separate board and potentially with a separate CEO, while still being owned by the same parent company.
I believe this is a sensible compromise and I and the Select Committee will be paying close attention to the details of the deal and how the proposals will be implemented over the coming weeks and months. BT argues that a full separation will have been challenging due to confusion over how company assets and pension liabilities will have been split up. It is likely that an instruction to physical separate the two BT entities will have been challenged in the law courts and will have distracted BT from what we want it to focus on: improving the UKs broadband infrastructure and improving customer service standards. BTs main competitors including SKY and Talk Talk also seem to be satisfied with deal which suggests it was a sensible one.