26th Jul 2016 07:07
LONDON (Alliance News) - Telecommunications giant BT Group PLC on Tuesday said it will establish an independent board of its Openreach network infrastructure unit, after UK media and communications regulator Ofcom called for the unit to become a "distinct company" within the business.
BT said it will form an independent board for the Openreach unit, provide the division with greater strategic, operational and budgetary responsibility and will increase consultation with other companies in the industry on future investment plans by the Openreach division.
"We have listened to Ofcom and industry and are introducing significant changes to meet their concerns. These changes will make Openreach more independent and transparent than it is today, something both Ofcom and industry have requested," said BT Chief Executive Gavin Patterson.
"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 added.
BT's statement was released after Ofcom tabled plans to reform the regulation of BT, centred on a proposal for Openreach to become a separate legal entity. Ofcom said Openreach should become a "distinct company" from BT with its own board, though still owned by BT.
Executives in the unit would become accountable to the new board rather than to BT's management, and Openreach would be obliged to consult formally with its customers, notably rival broadband providers like Sky PLC and TalkTalk Telecom Group PLC, on large investment plans, Ofcom said.
Openreach would own its own physical network and would run a separate strategy to BT, with control over its budget allocation. It should also have its own brand, not affiliated with BT.
Ofcom had previously avoided calling for the separation of Openreach from BT but had left the option on the table when it previously published a report on the regulation of the company.
On Monday, BT Chairman Mike Rake had suggested the group would be willing to form a separate board in order to stave off an enforced separation of Openreach, a move rivals of BT have been calling for.
"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," said Ofcom Chief Executive Sharon White.
Ofcom added it will be enforcing tough performance rules which will set out stricter requirements for Openreach on repairing faults and installing new lines quickly. It will also start publishing tables on communication providers' quality of service next year and will update its interactive maps showing information on mobile and broadband coverage in areas of the UK.
BT shares were up 2.0% to 395.37 pence at the open on Tuesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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