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BT strikes deal to legally separate Openreach division BT strikes deal to legally separate Openreach division
(35 minutes later)
BT has bowed to demands by the telecoms regulator Ofcom to legally separate Openreach, which runs the UK's broadband infrastructure.BT has bowed to demands by the telecoms regulator Ofcom to legally separate Openreach, which runs the UK's broadband infrastructure.
Ofcom said that Openreach will "become a distinct company with its own staff and management, together with its own strategy and a legal purpose to serve all of its customers equally". Ofcom said that Openreach will become a distinct company with its own staff, management and strategy "to serve all of its customers equally".
It must consult with customers such as Sky and TalkTalk on major investments.It must consult with customers such as Sky and TalkTalk on major investments.
Its boss will be appointed by an Openreach board with its own chairman. Ofcom boss Sharon White told BBC Radio 4's Today programme that "we can now expect better service from Openreach".
The regulator had threatened to force BT to legally separate Openreach.
However, Ofcom said on Friday that the company had agreed to all of the changes needed to address its competition concerns.
"As a result, Ofcom will no longer need to impose these changes through regulation. The reforms have been designed to begin this year."
BT's rivals such as Sky, TalkTalk and Vodafone, which use Openreach's network to offer broadband to consumers, have long complained of high charges and poor service from the division.
Ms White called it a "significant day" for phone and broadband users and pledged to "carefully monitor" how the revamped Openreach performs.
Under the agreement, Openreach chief executive Chris Selley will report to its chairman, Mike McTighe.
Openreach's 32,000 staff will transfer from BT to allow the new business to "develop its own distinct organisational culture".
BT chief executive Gavin Patterson said the agreement would end a "period of uncertainty" for staff.
"We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future," he said.
The BT logo will also be removed from Openreach's branding.