Ofcom has set up a dedicated team to monitor the legal separation of BT and Openreach, as the UK’s largest provider of broadband infrastructure looks to begin life as a more independent company.
The regulator’s new Openreach Monitoring Unit is one of several announcements made in a new report, Delivering a More Independent Openreach, which was published today (Thursday).
It follows certain commitments BT has made over the past year to ward off the threat of a structural separation of the two businesses.
These include the creation of an independent board and a promise to consult formally with the likes of Sky, TalkTalk and Vodafone on large-scale investments.
The report sees Ofcom officially commit to supporting a legal separation, by releasing BT from undertakings agreed between the two parties back in 2005.
Ofcom said a new framework would come into effect once all of the commitments that BT has promised are introduced in full.
It noted that BT and Openreach had taken “positive steps” but added four preconditions, mainly related to pensions, still needed to met before the new framework could be enacted.
An Openreach spokesperson said it was hopeful there would be no issues with these preconditions, which are largely reliant on the actions of government.
“We’re acting like Openreach Limited already,” the spokesperson said.
Ofcom said the new monitoring unit would measure a range of factors to ensure that BT and Openreach are “living by both the letter and the spirit” of the reforms it has set out.
It promised to report its findings in a series of reports, initially six months after the commitments come into effect, and annually thereafter.
“The real test for the new model will be whether it delivers the right results for consumers, especially increased network investment and higher service quality,” the report noted.
The regulator said it expected Openreach to be responsive to co-investment and risk sharing, as well as requests from BT’s competitors to build their own fibre networks using Openreach infrastructure.
It would “become clear within three years” whether the legal separation was working, Ofcom claimed.
The regulator said it would reconsider a structural separation “should there be repeated or serious breaches of compliance, or should it become clear that legal separation is not working overall”.
An Openreach spokesperson said: “We support Ofcom’s statement and we’re getting on with the job of creating a more independent Openreach.
“We’ve already made a lot of progress. Our CEO now reports to the Openreach Chairman and is accountable to the Openreach Board which has a majority of independent members.
“We’re also working more closely with our CP customers and we’ve introduced a new confidential phase to our consultations with them.”
A TalkTalk spokesperson said: “We’re glad that Ofcom is maintaining the pressure on Openreach, and has set out in more detail what they hope separation will achieve and how they will measure progress.
"If legal separation is to work, they need to continue this robust approach so that customers see meaningful, visible service improvements as quickly as possible.”
Vodafone declined to comment.