BT to separate from Openreach – here’s what it means for YOUR broadband package

BT has reached an agreement with the communications regulator Ofcom to legally separate from its infrastructure arm, Openreach.

Openreach builds and maintains the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK.

This infrastructure is not just used by BT but also other internet service providers, such as Sky, TalkTalk and Vodafone.

BT has faced growing calls from rivals to spin off Openreach as a separate company, and in November Ofcom ordered a legal separation of the firm , citing competition concerns.

BT Openreach Engineer

Openreach builds and maintains the tens of millions of copper and fibre lines across the UK
(Photo: PA)

On Friday, the pair said they have reached agreement on a "long-term regulatory settlement that will see Openreach become a distinct, legally separate company with its own board, within the BT Group".

Around 32,000 employees will transfer to the newly formed Openreach Limited. The new company will have its own branding that will not feature the BT logo.

Ofcom said, since BT has agreed to all of the changes needed to address its competition concerns, it will no longer need to impose these changes through regulation.

Ofcom boss Sharon White called it a "significant day" for phone and broadband users and pledged to "carefully monitor" how the new Openreach performs.

BT logo

Around 32,000 employees will transfer to the newly formed Openreach Limited
(Photo: PA)

"I believe this agreement will serve the long-term interests of millions of UK households, businesses and service providers that rely on our infrastructure," said BT chief executive Gavin Patterson.

"We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future."

So what does all this mean for you and your broadband package?

Better service?

The main reason Ofcom decided to force Openreach to operate as a separate company was because BT was making all the decisions about where Openreach should invest, without consulting the other telecoms companies using its infrastructure.

This meant that BT was essentially dictating which areas of the country received fibre broadband, and which technologies were used to deliver it.

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Ofcom will "carefully monitor" how the new Openreach performs
(Photo: Getty)

As a separate company, Openreach will have to weigh up the commercial interests of all its customers equally – theoretically resulting in better broadband service for everyone.

Although Openreach’s budget will still be set by BT, the new set-up will give BT’s rivals greater access the Openreach’s underground cables and telegraph poles, allowing them to more easily invest in their own fibre networks.

However, Richard Neudegg, head of regulation at, warned that the legal setup of Openreach won’t solve some customers’ frustration with broadband services alone.

"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," he said.

BT Openreach poster in Knutsford, Cheshire

Openreach will have to consider the commercial interests of all its customers
(Photo: PA)

"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."

Alex Neill, Managing Director of Home Services at Which? said: "Millions of people have suffered woeful levels of service from Openreach, so these reforms must lead to significant improvements for customers who have been let down for too long.

"Telecoms are now an essential part of our daily lives, so it’s vital that consumers now really do see better phone and broadband services."

Ethernet network cables

Telecoms are now an essential part of our daily lives
(Photo: Getty)

Lower bills?

While neither Ofcom not BT claim that the new arrangement will result in lower bills, it does at least put internet providers on a more level playing field.

This, in theory, should increase competition in the market, giving internet providers an incentive to offer better deals for customers.

"This is good news for consumers. It will mean better internet services for BT customers and those of rival providers, and could also mean lower bills," said Liberal Democrat shadow business secretary Don Foster.

Dan Howdle, consumer telecoms expert at, added that broadband, TV and phone customers will "enjoy all the benefits the stoking of competition in a fairer marketplace is likely to bring".

Concerned woman holding bills and talking on cell phone

Neither Ofcom not BT claim that the new arrangement will result in lower bills
(Photo: Getty)

While it’s hard to pinpoint exactly what these benefits will be at this stage, most industry commentators seem to agree that this new arrangement will benefit consumers in the long run.

It could also help to distance BT from accusations that it is pouring money into buying TV rights for Premier League football matches at the expense of Openreach’s fibre broadband rollout.

Drawing a line

Perhaps the most important thing about today’s agreement is that it draws a line under the long-running and bitter dispute over the future of Openreach.

"This is not the full structural separation many of BT’s retail rivals – including providers served by Openreach’s network – have campaigned hard for," said Neudegg.

"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 British Telecom (BT) logo

The agreement draws a line under the long-running dispute over the future of Openreach
(Photo: Getty Images)

By reaching a voluntary agreement with Ofcom, BT has avoided the costs and delays to infrastructure rollout that a full separation would have entailed.

"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," said Kester Mann, principle analyst at CCS Insight.

"BT’s rivals, notably Sky and TalkTalk, will publicly 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."