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Broadband could become cheaper and faster as Openreach splits from BT

2 April 2017


BT finally agreed to separate from its subsidiary

Earlier this month, BT finally agreed to separate from its subsidiary Openreach following a ruling from the telecoms regulator Ofcom. The move comes after an initial Ofcom investigation just over a year ago, looking into the way Openreach is run.

Ofcom launched a review into Openreach’s operation and potential suggestions for the company’s future in December 2015 after criticisms from competing service providers that a BT-owned company effectively manages the country’s broadband infrastructure. Despite calls for BT to sell off Openreach, Ofcom ruled that this wouldn’t be necessary, instead deciding that the broadband operator should no longer be a BT subsidiary.

Openreach owns and maintains the UK’s telecoms infrastructure, connecting almost all homes and businesses to the nation’s telephone and broadband network. In order to provide all of us with phone and internet access, it has to grant access to the comms network not only to BT customers, but to rival service providers like Sky, TalkTalk and Vodafone.

This has previously caused considerable controversy in the minds of customers both in the home and for business, with concerns that Openreach’s ties to BT creates a potential conflict of interests. As Openreach is now about to become a distinct company, it is expected to set its own agenda and management structure independent of direction from BT, allowing all customers across a wide range of service providers to be treated equally.

Reactions to the split

With BT now in agreement of the split, which will see Openreach gain more independence and control over its own operations, it won’t be necessary for Ofcom to enforce regulation changes as first thought. However, while Openreach will exist as a legally separate company under the new arrangement, it will remain a part of the overall BT Group to ensure as little disruption as possible to existing services.

It is hoped that this move won’t cause delays or disturbances to customers in the way that a complete sell-off might. This arrangement also means that existing Openreach employees transferring across from BT will retain their rights and benefits within the company structure, like BT’s existing pension scheme.

It may not be the total structural separation that rival providers might have hoped for, but there is an air of optimism amongst commentators and competitors about the potential for vast improvements in the UK’s communications infrastructure.

A lack of adequate investments from BT in the past, alongside higher charges to rival providers being passed on to customers, have been major criticisms of Openreach up to now. It’s believed that with amends to the company structure, improvements to and maintenance of Britain’s broadband and phone lines will be smoother. Openreach will need to consult with other major providers on its strategies, which will be overseen by a board of directors, independent of affiliation with any service providers.

This has prompted generally positive reactions from rival providers across the board. A spokesperson for Sky noted that: “a more independent Openreach is a step towards delivering better service to customers and the investment that the UK needs.”

Meanwhile, TalkTalk’s Chief Executive, Dido Harding, stated: “We hope this is the start of a new deal for Britain’s broadband customers, who will be keen to see a clear timetable from Openreach setting out when their services will improve.”

What does it mean for your business?

The Chief Executive of Ofcom, Sharon White, called BT’s agreement to the separation a “significant day for phone and broadband users,” which includes thousands of businesses up and down the country. She also stated that the new structure of Openreach “will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry – not just BT.”

This will give business users the flexibility and freedom to choose their phone and broadband service provider without worrying about any unnecessary extra charges or dips in the quality of service. It’s also hoped that customer service will be greatly improved when it comes to identifying, reporting and fixing faults on the network.

As customer complaints come through the individual service providers, it’s been up to Openreach to prioritise which repairs need to be addressed more quickly. With more impartiality between providers, potential problems can be tackled in a fairer manner, helping businesses to get back online quickly, no matter who provides their network access.

Alongside better deals on pricing, it’s expected that faster fibre connections will become more widespread. Many businesses already have access to superfast fibre broadband on the Openreach network, but ongoing trials and infrastructure development could help to improve the quality of service across the board.

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