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As regulatory update looms, Sir Mike Rake says U.K. incumbent willing to give networks arm its own board and control of its budget.
BT is willing to create an independent board of directors for its Openreach arm and give the unit more control over its investment budget in a bid to avoid enforced structural separation, company chairman Sir Mike Rake said on Monday, before admitting that he is unsure if these measures will be sufficient to appease the U.K. telecoms regulator.
Speaking in an interview with BBC Radio 4’s Today programme, Rake talked up the current degree of separation between BT and its networks arm that has enabled a number of new competitors to enter the U.K. fixed-line market over the past decade, but admitted that the telco now needs to "improve the transparency" when it comes to Openreach’s operations.
"We’re absolutely willing to form an Openreach board that will have an independent chair [and] a majority of independent directors," Rake said.
"We’re willing to give more authority to Openreach on determination of its capital investment programme," he added. "We want to formalise more their ability to listen to the [retail communications providers], so they are engaging with them, ensuring that we can also make sure we’re delivering for them as well as for BT Retail."
Rake’s comments addressed points raised by Ofcom when it presented the initial conclusions of its strategic review of the U.K. market in February.
"Ofcom has decided it is necessary to overhaul Openreach’s governance and strengthen its independence from BT," the regulator said at the time. "In future, Openreach needs to take its own decisions on budget, investment and strategy – such as the deployment of new networks," it said.
Ofcom is due to comment further on the matter on Tuesday, including on the likelihood of structural separation, the threat of which could be used to push BT to make changes to the way Openreach is run and improve service levels.
But will an independent board and control of its own budget be enough to convince the regulator to allow Openreach to remain as part of BT?
"I don’t know," Rake admitted.
He noted that BT has made significant investments in the rollout of high-speed broadband, including fibre networks. As such, "we believe…this would be the wrong time to break up BT and distract us from the remaining investment to get superfast and ultrafast broadband right across the country in the next two to three years," he said.
