BT and Ofcom's Openreach deal: Here's how City analysts, competitors and consumer groups reacted

 
Oliver Gill
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Openreach will directly employ 32,000 employees

BT and telecoms regulator Ofcom this morning announced that they'd settled their differences over the future of Openreach, the company that owns the majority of Britain's telecoms infrastructure.

It's been a long road for both parties, and it did appear that Ofcom was going to be forced into going to European authorities to force through the deal.

Read more: BT retains control in Openreach separation

Openreach will now be a separate legal entity, though still part of the wider BT group. Here's how competitors, analysts and consumer groups reacted.

Competitors

We welcome the agreement to create a legally separate Openreach. The new company will be better placed to deliver the improved investment and service that consumers and businesses deserve. This deal will require robust Ofcom monitoring and enforcement to ensure it delivers the improvements the regulator expects. 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.

- Dido Harding chief exec of TalkTalk

This is a welcome step that we have long called for on behalf of our customers. A more independent Openreach is a step towards delivering better service to customers and the investment that the UK needs. It’s important that today’s agreement is now implemented by BT in good faith and without delay.

- A spokesperson for Sky

This is an encouraging start. Ofcom has acted decisively to improve the market for Openreach customers and the UK as a whole. We look forward to reviewing the detail of how Ofcom will properly enforce Openreach’s new structure to ensure the UK gets the ultrafast fibre networks it will need to compete effectively in the global gigabit economy.

- A spokesperson for Vodafone

We welcome the news that BT has reached an agreement with Ofcom to legally separate from Openreach. Legal separation between retail businesses and infrastructure operators can improve transparency and customer service.

This has worked well in the energy market and we believe it will be a positive step for customers. We look forward to working with the soon-to-be independent Openreach to continue providing a high quality essential service for customers.

- David Walter, Director of Home Services at SSE

Read more: BT Openreach changes aren't enough for Ofcom

City analysts

BT has reached agreement with Ofcom on Openreach governance without ceding legal ownership of assets. But new Openreach Board now be under pressure to define rollout plans that are more ambitious than BT's legacy plans as evidence of independence

- Jerry Dellis, equity analyst at Jefferies

All this begs the question whether Openreach will have the true independence being demanded by customers and competitors to foster real competition on the UK network. Is this simply a legal fudge on an existing subsidiary to get everyone off its back? Was Ofcom so tired of it all that even it thought ‘that’ll do’? Does the fact that shares in competitors Sky, Vodafone and TalkTalk have barely moved suggest doubts there too?

- Mike van Dulken, head of research at Accendo Markets

Read more: Can Ofcom force through BT Openreach split?

MPs

It is about time that BT has finally agreed to a legal separation from Openreach. There has been significant Parliamentary concern about the current setup, which led to 120 MPs backing a BIG report calling for separation. Now both BT and Openreach must focus on ensuring that the millions of UK customers receive better broadband.

- Grant Shapps MP, Chair of the cross-party British Infrastructure Group of MPs (BIG)

Consumer groups

Today’s news provides welcome certainty after a long-running and bitter dispute over the future of the UK broadband network. Resolving it now, without having to go to Brussels to enforce a new structure, will bring much-needed stability to a UK market still reeling from the Brexit referendum.

The agreement reflects Ofcom’s determination to improve BT’s performance and clear concern that the UK broadband market has not been as competitive or operated as effectively as it would have liked. Its determination in negotiations with BT under the increasingly impressive stewardship of Sharon White, should be applauded.

BT’s rivals, notably Sky and TalkTalk, will publically claim that the regulator should have gone further by enforcing a full structural separation. However, this option was always the most radical and controversial the regulator could have taken. In private they should be more than satisfied with the changes Ofcom has pushed through.”

- Kester Mann, Principle analyst, operators, CCS Insight

"What it does is offer a middle ground that gives Openreach independence, while still being owned by BT. It is a step further than the functional separation that led to the creation of Openreach in the first place.

"The industry should now draw a line under the debate on the structure of Openreach, and focus on actually delivering the better service everyone wants to see. Most consumers won't be bothered whether or not 'a BT Group business' is written on the side of Openreach vans, what matters is the UK's digital infrastructure actually getting better in practice.

"Of course, the legal setup of Openreach won't solve some customers' frustration with broadband services alone. Ofcom needs to act across the board to ensure competition and service improvements. This includes universal service obligations, quality of service requirements on regulated products, sorting out industry switching processes and automatic compensation when providers fail to deliver."

- Richard Neudegg, Head of Regulation at uSwitch.com

This is definitely a step in the right direction and one I hope will eventually mean cheaper and better broadband for everyone. With the government’s pledge to get everyone online in this week’s Budget having a solid, able and independent party responsible for its roll out is imperative.

“Households deserve an affordable, reliable broadband connection and a choice of supplier wherever they live. Hopefully this move will take us one step closer to that being possible.”

- Hannah Maundrell, editor in chief of Money.co.uk

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