The great British broadband divorce is a go.
BT and its back-end division Openreach announced they were set to legally separate on Friday after a dispute that has been bubbling away for more than a decade.
BT's rivals have long complained that they must rely on Openreach, which provides all the infrastructure for the whole of the UK's broadband network, but is owned by one of their direct competitors.
The main benefit of the separation is that BT will now no longer control Openreach's investment decisions -- instead, all broadband providers will have to be consulted. As demand for broadband grows, this means all providers should be better equipped to meet the needs of their customers. It should also mean better value and customer service for people who only want a landline.
"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 CEO Gavin Patterson in a statement. "It will also end a period of uncertainty for our people and support further investment in the UK's digital infrastructure."
Telecoms watchdog Ofcom guided the talks after putting its foot down in November last year, saying BT failed to meet demands ensuring Openreach was more independent. It stated at the time its intention to force the two to separate, although given the costs of creating two independent companies it was willing to remain open to other suggestions.
Following four months of discussions, Ofcom decided Openreach should become a distinct company with its own staff and strategy, as well as a legal purpose to make sure it doesn't give preferential treatment to any one broadband provider. Structurally it is still part of BT, which retains ownership of its assets, but Openreach will manage those assets independently with its own board and chairman.
"The new Openreach will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry -- not just BT," said Ofcom Chief Executive Sharon White in a statement. "We will carefully monitor how Openreach performs."
The broadband industry in the UK breathed a sigh of relief at the news. The resolution of the saga means the dispute won't have to be escalated to the European Commission.
"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 a Brexit referendum," said Kester Mann, principle operators analyst at CCS Insight.
The next steps will see Ofcom set out how it will monitor and enforce the new structure for Openreach as 32,000 employees transfer across from BT.