Ofcom has started formal proceedings to force through a legal separation of BT as months of negotiations over a voluntary agreement failed to appease regulatory concerns about the independence of the Openreach division. Openreach should become a distinct company within the BT group, the regulator said.
Companies including Sky, TalkTalk and Vodafone rely on access to the network to provide internet services to customers, and have pushed for a full break-up of BT by splitting Openreach into a fully independent company. “We are disappointed that BT has not yet come forward with proposals that meet our competition concerns. Some progress has been made, but this has not been enough, and action is required now to deliver better outcomes for phone and broadband users,” Ofcom said. If Ofcom follows through with its threat, it will be one of the boldest regulatory moves made in the telecoms sector.
On Monday, BT had appointed Mike McTighe – who was on the board of Ofcom between 2007 and 2015 – as the first chairman of Openreach.
BT said in a statement: “We put forward proposals in July that we believe are fair and sustainable, and that meet Ofcom’s objectives without disproportionate costs”. BT said its proposals are “fair and sustainable” despite Ofcom’s frustration, adding: “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.”
