BT vows changes to Openreach in response to watchdog’s reform proposals

A BT Openreach engineer at work.

A BT Openreach engineer at work. - Credit: Archant

East Anglian business leaders have renewed calls for better broadband after Ofcom published its proposals to make its Openreach division a “distinct company” within the BT group rather than face a full sell-off.

BT shares rose 3% after Ofcom proposed major reform of the division of BT which develops and maintains the UK’s main telecoms network used by telephone and broadband providers such as Sky, TalkTalk, Vodafone and BT Consumer.

The proposals are a relief to the telecoms giant, which has faced calls for Openreach to be split off from the rest of the group.

But businesses in this region are continuing to press for an end to the ‘broadband divide’ which has left many with much lower broadband speeds than companies based in the bigger urban areas.

Stephen Britt, chairman of Suffolk Chamber of Commerce’s Transport & Infrastructure Board: “Suffolk Chamber of Commerce believes it is vital that all businesses in the county have access to superfast broadband. Alongside an improved rail and road network, high level digital connectivity is vital for the future prosperity of Suffolk.

“The key issue for business users will be both how the current rollout programme can be further accelerated and how download speeds can be maximised.”

Essex Chambers of Commerce director of policy David Burch said: “Whilst we support Ofcom’s proposals to move away from a reliance on copper-based technologies and encourage the large scale development of ultra fast networks we are disappointed that they did not take the step of making Openreach a truly independent supplier separate from BT.

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“We know from talking to chamber members large and small in both urban and rural areas of Essex that they are still receiving poor services standards, ‘not spots’, unreliable connections and a marketplace that fails to offer genuine competition and choice. With the digital economy growing ever more important along with the day to day reliance that businesses have on broadband the opportunities to see real growth in the Essex economy will be potentially held back.”

But the Country Land and Business Association (CLA) said there should not be a forced sell off of Openreach by BT because of the slowdown and distortion it could cause to getting homes and businesses connected across the countryside.

CLA East regional director Ben Underwood said: “Rural communities deserve better broadband. Despite significant progress, too many places still receive a poor or non-existent service – Openreach must do better. We welcome Ofcom’s recommendations and we see them as an important step towards planning for the next phase of investment in our broadband infrastructure.”

BT chief executive Gavin Patterson said the company was introducing “significant changes” to meet the concerns of Ofcom and the industry, adding: “These changes will make Openreach more independent and transparent than it is today, something both Ofcom and industry have requested.

“Openreach is committed to delivering better service, broader coverage and faster speeds and these changes will enable it to do just that.

“Our proposals can form the basis for a fair and sustainable regulatory settlement and we believe they can also enable Ofcom to bring its review to a speedier conclusion.”

He said the “more extreme solutions proposed by others” would be complex, disproportionately costly and time consuming to implement and “would also undermine Openreach’s ability to invest and create years of uncertainty”.

The proposals include making Openreach a distinct company with its own board, including a majority of non-executive directors not affiliated to BT Group.

It also proposes greater consultation with customers on large-scale investments, its own staff working for Openreach, ownership of assets that it already controls, its own strategy and control over budget allocation, and independent branding.

Ofcom chief executive Sharon White said: “We’re pressing ahead with the biggest shake-up of telecoms in a decade, to make sure the market is delivering the best possible services for people and business across the UK.”

Ofcom, which is seeking views on the plans by October 4, said the new model “would provide Openreach with the greatest degree of independence from BT Group that is possible without incurring the costs and disruption - to industry and consumers - associated with separating the companies entirely”.

Rival companies such as Sky, Vodafone and TalkTalk have long called for a split between BT and Openreach.

They pay to use the network and have previously complained over poor service and urged the group to replace its ageing network of copper wire.