BT plans to make Openreach more independent by bolstering its board were today rebuffed by regulators as falling short of their requirements.
Openreach held its first board full meeting yesterday and today announced the appointment of Sir Brendan Barber, the former general secretary of the Trade Union Congress, Edward Astle, a former board member of the National Grid, as independent directors.
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Regulator Ofcom wants Openreach, which owns most of the UK telecoms infrastructure, to be legally separated from the BT group. It believes an independently run firm will encourage greater capital investment sector and deliver more competitive pricing for customers.
“These changes fall short of our requirements for a legally separate Openreach that delivers for all of its customers," said a spokesperson for Ofcom, and it added it plans to force through its plans by applying to European authorities if an agreement with BT cannot be made.
Ofcom's gripe with BT's plans is over the corporate governance of Openreach, not its ability to remit profits back to its parent.
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In particular, regulators want Openreach to have a stand alone board and management team with no reporting lines feeding back into the wider BT group.
A spokesperson for BT said its current strategy was implementing commitments the group had previously made and the group was hopeful of reaching a voluntary settlement with Ofcom.
Meanwhile, Openreach chairman Mike McTighe pledged the firm, which owns most of the UK’s telecoms infrastructure, would turn things around.
I understand that customers sometimes feel let down by Openreach because we haven’t always delivered the service they expect or that we hope to provide.
McTighe added Openreach had halved the numbers of missed appointments to fix the network over the last year.
“But we need to do more to re-build trust and credibility,” he said.
McTighe added: “We are determined to meet our customers’ expectations and to strengthen the autonomy, governance and transparency of Openreach to facilitate the delivery of better outcomes for everyone who has a stake in our business."