BT Separation: The end of a beautiful relationship?

Will Ofcom's proposal to establish Openreach as a legally separate subsidiary of BT achieve its goals of more investment in fibre?

In July 2016 Ofcom, the UK’s regulator for electronic communications markets, proposed that BT’s Openreach division should become a legally separate company within the BT Group, but this has been resisted by the company . In response, Ofcom has announced that it plans to refer its plans to the European Commission  to force through the changes. Its proposal follows from its Strategic Review of Digital Communications (DCR) launched in March 2015 . In that review Ofcom concluded that, although the current “functional separation” model worked well in deterring operational discrimination by BT against retail competitors that relied on its network, BT was still able to make strategic discrimination choices by designing the network to suit its own purposes. Ofcom was also concerned about the lack of fibre based broadband to residential customers. This edition of Hexagon expresses scepticism that Ofcom’s approach will achieve anything more than BT’s own proposals.