Full separation of BT’s infrastructure arm Openreach is not “off the table” – Bradley

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BT has been dealt a blow just months after the telecoms group escaped its infrastructure arm Openreach being hived off by the regulator.

Karen Bradley – the culture, media, and sport secretary – warned BT that Openreach could still be split out to a separate company despite Ofcom’s proposals to leave it under the BT Group umbrella.

In July Ofcom recommended a set of reforms for Openreach though warned if BT failed to deliver it would look at so-called structural separation. The consultation is ongoing and expected to close in three weeks time.

The spectre of what's known as structural separation of Openreach from BT has been hanging over the company for years.

Investors are desperate for some kind of formal resolution to the debate, which has been repeatedly kicked into the long grass by a long line of regulators.

Read more: TalkTalk boss says Ofcom's plans for BT and Openreach are not enough

In July Ofcom recommended a set of reforms for Openreach though warned if BT failed to deliver it would look at so-called structural separation. The consultation is ongoing and expected to close in three weeks time.

BT is confident it will be able to hold on to the infrastructure arm.

“We are making significant voluntary changes that we believe meet [Ofcom’s] concerns and remain hopeful that a voluntary settlement can be reached,” a BT spokesperson said.

BT shares moved lower after Bradley said a total split was not “off the table”, and closed down 1.4 per cent.

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Bradley’s comments came as MPs debated the proposed Digital Economy Bill in parliament which could overhaul the way internet service providers treat their customers.

Bradley called the bill a "central plank" in its plans to opens "help people and businesses benefit from digital".

Following Ofcom's proposals former business minister Anna Soubry for "radical action" to deliver super fast broadband across Britain.

Soubry rallied against the decision, saying Ofcom was "too soft" and slammed BT for "failing to deliver", adding that it had been given "enough second chances".

Meanwhile, some of BT's biggest rivals have teamed up to lobby Ofcom over BT's control of Openreach, calling on internet users to complain directly to the regulator. 

A spokesperson for the campaign – which includes TalkTalk, Sky, and Vodafone – said:

The campaign to Fix Britain’s Internet welcomes the Secretary of State’s announcement that the structural separation of Openreach remains on the table.

There is widespread agreement that the service Openreach provides today is unacceptable and must improve. There are too many faults, delays and missed appointments.

As a coalition of Openreach’s largest customers … Our concern remains that [Britain's] digital future will not materialise if Openreach’s strategy and budget remains controlled by BT Group, and without reform we will limit our ambitions and hinder the industry’s ability to play a greater role in developing the broadband infrastructure we need for the future.

City PM understands around ten thousand people have contacted Ofcom via the campaign website.

Read more: Economic think tank calls for Openreach to be carved out from BT

The Digital Economy Bill covers electronic communications infrastructure and services; protection of intellectual property; data-sharing; Ofcom regulation of the BBC, and age-related TV licence fee concessions.

It would also require all pornography websites available in the UK to implement age verification, with a new regulator to oversee the system.

This was the House of Commons second reading of the bill, which aims to:

  • Give households the legal right to request fast broadband connection;
  • Provide consumers and businesses better information about communication services, switching and compensation;
  • Cut costs for new infrastructure and simplify planning rules, and
  • Enforce direct marketing laws, and impose civil penalties for online pornographers who do not verify the age of their customers.

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