BT’s split from Openreach is on the cards

OFCOM has warned that BT could be split from its subsidiary which builds the infrastructure connecting people to the internet.

Separating the telecoms giant from the Openreach division is one issue being considered in the media watchdog’s review of the telecommunications industry, which will be published next year.

Other broadband providers rely on the cables laid by Openreach, although Virgin Media has built its own network in some areas.

But concerns have been raised that BT’s ownership of the Openreach network, and its access to Government subsidies to improve the service, gives it an unfair advantage in the industry.

Sharon White, the regulator’s chief executive, yesterday said breaking them up would improve broadband provision. She told BBC radio 4’s Today programme: ‘We’re looking at so-called structural separation, whereby Openreach could be spun out more fully from the rest of BT Group.’

Other options include further deregulation, or maintaining the current structure but imposing requirements on the quality of service delivered by Openreach.

BT said: ‘The UK’s broadband market compares well with other major european countries, but it has also changed beyond recognition in the past decade and regulation needs to be updated to reflect that. We believe the current model works extremely well but there is always room for improvement and for deregulation, given the UK market is now far more competitive than it was a decade ago.’

White’s comments come a day after Virgin Media released a report slamming the subsidies BT will receive under the Government’s Broadband Delivery UK scheme, in which it estimates BT (down 4.2p to 492.25p) could make up to £869m over 20 years. BT responded by saying it was ‘disappointing that Virgin Media are seeking to derail a successful project’.