Startups in the UK will be hoping for better performance from the local broadband market after telecoms regulator Ofcom agreed a deal with the country’s..
Startups in the UK will be hoping for better performance from the local broadband market after telecoms regulator Ofcom agreed a deal with the country’s largest broadband provider, BT, to legally separate Openreach: aka the division of BT that builds and maintains the broadband infrastructure.
It’s not a full structural separation — as some have called for — but is a step further than the functional separation imposed by the regulator just over 10 years ago. Under the new deal Openreach will still be owned by BT but will be more independent, gaining its own management staff, an independent board and directly employing its circa 32,000 staff.
Ofcom believes this legal separation will allow Openreach to develop “its own distinct organisational culture” as a BT-owned company vs just being a division of the telco giant. And although BT will still be setting Openreach’s overall budget, the decisions on how the money is allocated will be taken independently of the telco.
The main hoped for outcome is increased investment in broadband infrastructure and better access for rivals to BT’s networks. Competitors (and consumers) have long complained the telco has dragged its feet about investing in the network in order to protect its own bottom line — leaving UK broadband consumers to suffer slower speeds and higher prices than they might otherwise.
BT does not own and operate the only broadband network in the UK, but given its long history and former status as a monopoly supplier of the national telephone service it does have the largest network. Meanwhile rivals that have built their own broadband networks — such as cable provider Virgin Media — have tended to concentrate on more densely populated regions, leaving large areas of the country where the only choice for broadband is to use BT’s pipes.
