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Ofcom satisfied with progress on BT Openreach split

Ofcom has published its first annual report on the legal separation of BT and Openreach, and said it is broadly satisfied with progress to date, despite hiccups relating to the BT pension scheme

Telecoms regulator Ofcom has pronounced itself “broadly satisfied” with the steps taken so far to legally separate national operator BT from its network infrastructure business Openreach, saying progress has been made in many areas.

These include the implementation of an independent board and leadership, the removal of BT from Openreach’s branding, putting in place new compliance procedures and carrying out staff training on the changes.

“Senior executives have demonstrated a strong commitment to making the new regime a success, but also recognised there is more to do,” said Ofcom in the report, which was produced by a specialist team set up in 2017 specifically to monitor the situation.

The biggest stumbling block to full legal separation has been a number of previously unforeseen complexities relating to BT’s pension scheme. These issues, which have now been resolved, have held up the transfer of employees from BT to Openreach under the Transfer of Undertakings (Protection of Employment), or Tupe, legislation.

BT has now confirmed the Tupe process will begin in the next few months, and consultation with staff on their future employment should be complete by the end of 2018.

Ofcom said there is more work to do on more independent decision-making, adding that neither BT nor Openreach had yet struck an appropriate balance in this regard. It committed to monitoring this more closely over the next 12 months to make sure BT truly lets go of the apron strings.

In particular, it said, several people had suggested that BT was “significantly involved” in Ofcom’s planning process for the current fiscal year. This was supported by a number of emails between unnamed senior executives.

It was also a source of concern that BT’s Investment Borard reviewed Openreach’s 2018 investment proposals for inclusion in its strategic plans before the final draft plans were presented to the Openreach board.

Ofcom also noted that the wider telecoms industry seemed cautiously optimistic about the new arrangements. Communication service provider (CSP) customers of Openreach had stressed how important it was to make sure the separation actually resulted in tangible change, and there was still some uncertainty as to whether the new arrangements would truly enable Openreach to treat all its customers equally.

Read more about BT and Openreach

  • Openreach chief technology and information officer Mark Lam discusses how IT is helping to forge a new and distinct identity for the network infrastructure business as it leaves the wider BT Group.
  • BT CEO Gavin Patterson stepped down just weeks after he announced 13,000 redundancies across the organisation.

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