BT wards off break-up, sets up independent unit to manage local network |
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Thu, 22 Sep 2005 16:45
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LONDON: BT Group is setting up a new division in accordance with a deal concluded with media regulator Ofcom so that it could ward off a possible break-up of the company under competition rules. This will mean its rival will have equal access to the country's communication network unlike in the past.
The new division, Openreach, will assume control of the company's local network linking homes and businesses in the country to its telephone exchanges. Previously BT had complete control at the local exchange level, while its rivals had to depend on this network, which led to perennial complaints that BT stiffled competition.
The new division will start functioning from January 2006 with assets of 8 billion pounds and estimated revenue of over 4 billion pounds. It will be BT's fourth division, the others being its Retail, Wholesale and Global Services units, all functioning independently. Openreach will have a separate headquarters, and about 30,000 employees, 25,000 of them engineers, who will visit 11,000 homes and offices every day to install new phone lines and upgrade local networks on behalf of hundreds of companies. There will be a separate chief executive, Steve Robertson, and the unit will be constantly monitored for its performance and independence by a newly-created Equality of Access Board. It is also proposed that some 22,000 vans of BT are to be re-painted to distinguish them from the rest of the BT fleet.
Ofcom in a statement said it has given final approval to an agreement reached in June, which it hoped would lead to lower prices and greater choice of products and services to customers and businesses. Ofcom had in November last year said that BT could be broken into two unless its rivals were able to get a fairer deal.
Under the deal, BT's Retail unit will have to buy the wholesale products from Openreach at the same rates the smaller companies would pay.
Immediately after announcing the deal, comprising 230 different undertakings and commitments, BT's chief executive Ben Verwaayen said the settlement represents the biggest regulatory change since BT was privatised more than 20 years ago.
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