On 10 March 2017, the UK telecoms regulator, Ofcom, announced significant reforms to how BT’s network arm, Openreach, will be governed.
Ofcom has stated that these changes represent the “biggest reform of Openreach in its history” and it seems certain that they will have a material effect on UK telecommunications markets.
Ofcom and BT have published a number of documents which explain the new framework that BT and Openreach Limited will operate in. Broadly, the changes aim to provide Openreach Limited with (in Ofcom’s words) “the greatest degree of independence from BT Group possible without incurring the delays and disruption – to industry, consumers and investment plans – associated with structural separation or the sell-off of Openreach to new shareholders.”
Key changes include:
- Legal separation/ governance Openreach will be incorporated as a separate company with a raft of independence focussed corporate governance arrangements, seeking to ensure Openreach has scope to develop its own strategy and treats all customers equally.
- Business separation The new arrangements also include other operational business separation requirements (e.g. on staff, branding, premises, IT systems and information sharing).
- Consultation with other market players Openreach will also be required to formally consult confidentially with other market players such as Sky, TalkTalk and Vodafone on significant network investments.
Detailed arrangements on various important matters are yet to be confirmed; however, it is expected that these matters will be dealt with this year and that the new arrangements will fully come into force then.