BT agrees to separate national broadband division Openreach

The UK's biggest telecoms group BT has agreed to legally separate, the division which runs the national broadband, Openreach as it moves to improve the UK's digital infrastructure and resolve a two-year regulatory battle.

BT has been slammed by rivals including Sky, TalkTalk and Vodafone over Openreach's poor service.

They said Openreach failed to invest enough in the network and served BT's bottom line rather than the interests of the UK's broadband infrastructure.

The telecoms company had had a running feud with  UK media regulator Ofcom, which had been pushing for more independence to Openreach to promote competition and boost the rollout of superfast broadband.

''This is a significant day for phone and broadband users,'' said Ofcom chief executive Sharon White. ''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.''

Openreach would become a separate entity and Ofcom would drop its threat to involve European regulators to force BT's hand.

About a third of BT's 32,000 staff would shift to Openreach.

Ofcom said Openreach would be allowed ''to develop its own distinct organisational culture''.

Meanwhile, White told BBC Radio 4's Today programme that "we can now expect better service from Openreach".

Ofcom said on Friday that Openreach had agreed to all of the changes needed to address its competition concerns.

"As a result, Ofcom will no longer need to impose these changes through regulation. The reforms have been designed to begin this year."

Rivals of BT including Sky, TalkTalk and Vodafone, which used Openreach's network to offer broadband to consumers, had long complained of high charges, poor service and failure to invest in the division.

Welcoming the announcement Sky said, "A more independent Openreach is a step towards delivering better service to customers and the investment that the UK needs. It's important that today's agreement is now implemented by BT in good faith and without delay."