The process of reforming Openreach, the company that owns the UK’s primary internet and telephone network, looks set to conclude as BT agree to a full legal separation.
This comes after Ofcom, the country’s telecoms regulator, ordered the split towards the end of 2016 to address concerns about competition.
The change means that Openreach will become a distinct company with a separate board and a legal purpose to serve all of its customers equally. This is important as other telecoms providers rely on Openreach infrastructure to serve their customers. As BT have agreed to the request, the split will go ahead without the need for further regulation from Ofcom.
Why the Split?
Major UK telecoms providers, such as TalkTalk, Sky and Vodafone, have been lobbying for Openreach to be split away from BT for a long time. The group even formed a coalition and created the Fix Britain’s Internet website to garner support for their cause.
The main reason that these companies have been pushing so hard for separation is the belief that BT was using Openreach for its own purposes, rather than acting in the interests of the nation as a whole. Ofcom had already stated this to be the case.
This meant that the majority of the investment into Openreach had been spent on maintaining the existing copper network and not invested in new technologies, such as fibre connections. As a result, the UK is falling behind many other countries when it comes to network infrastructure.
What Will the New Openreach Look Like?
BT has already started creating the Openreach board, which contains a majority of directors that are independent of BT. Some of the additional benefits of the split include:
- Control over budget allocation and a strategy separate of BT – Openreach will have its own strategy and annual operating plan.
- Staff will work for Openreach – to give Openreach an opportunity to develop its company culture.
- Openreach control of assets – BT will hand over decision-making responsibility for investment in physical assets, such as the UK network.
- Consultation and confidentiality for customers – Openreach will be obliged to discuss large-scale investments with providers such as TalkTalk, Sky, and Vodafone. These providers will now be able to discuss plans for the future without risk of the information getting back to BT.
It’s been a busy few weeks for BT; also announced was the Ofcom decision to fine the company £42m for breaching delivery contracts with telecoms providers. The penalty comes after Ofcom agreed that Openreach was abusing the “deemed consent” status on orders.
As Leased Lines are so vital to UK business, there are strict guidelines around the time that Openreach have to install them before compensation is payable. The “deemed consent” status freezes the clock when there are circumstances outside of Openreach’s control. The regulator found that Openreach had been using this status unfairly to get out of paying late delivery fines.
What Does This Mean for Your Business?
At Air IT, we’re looking forward to seeing what this change will mean for UK businesses. More investment into business-grade technologies such as fibre will improve connection speeds and help companies run more efficiently.
Hopefully, connectivity options will also improve for businesses based in geographical problem areas, such as rural locations. And ultimately, splitting out Openreach so that its aims are more focussed on building a network fit for the future can only be a good thing for the country.
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