Ofcom proposes major reforms for BT Openreach

Ofcom has proposed that BT's Openreach network become a "distinct company" within the BT Group - but stopped short of calling for a sell-off.

The telecoms giant has faced calls for Openreach to be split off from the rest of the company, but on Tuesday the regulator instead proposed major reforms.

Openreach is the division of BT that develops and maintains the UK's main telecoms network used by providers including Sky, TalkTalk, Vodafone and BT Consumer.

The proposals come a week after MPs said if BT does not boost investment in Openreach and address poor service, Ofcom should force it to split off the division.

A scathing report from the Culture, Media and Sport Select Committee claimed BT has "significantly under-invested" in Openreach, which is responsible for rolling out super-fast broadband across the UK.

MPs accused BT of putting the group's interests ahead of customers and its Openreach business.

They said tougher penalties for poor service would encourage BT to invest more in Openreach.

Rival companies such as Sky, Vodafone and TalkTalk have long called for a split between BT and Openreach.

They pay to use the network and have previously complained over poor service and urged the group to replace its ageing network of copper wire.

As well as making it a distinct company, the new Ofcom proposals include greater consultation with customers on large-scale investments, its own staff working for Openreach, ownership of assets that it already controls, its own strategy and control over budget allocation and independent branding.

Sharon White, Ofcom's chief executive, said: "We're pressing ahead with the biggest shake-up of telecoms in a decade, to make sure the market is delivering the best possible services for people and business across the UK."