Britain's biggest telecoms group has agreed to put the division that runs the national broadband network into a legally separate company in a bid to improve the country's digital infrastructure and resolve a two-year regulatory battle. David Pollard reports.
It's taken two years to get there... Pitting BT on one side - regulators and BT's rivals on the other. But finally, BT has agreed to spin off its Openreach broadband division that runs the UK's national broadband network. Competitors like Sky, TalkTalk and Vodafone have complained of a poor service from Openreach - and of a lack of investment in infrastructure from the parent company. Regulators had threatened to take the case to the European Commission. Now, though, Openreach will become a separate entity - with its own logo, own staff, and own board. Analysts want to know whether it will also have its own cash flow. (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "That for me is the crucial question. If the answer is that Openreach can basically, has a free hand to use as much of its own generated cash flow as it sees fit to reinvest into the network, then I think it'll be a clearer case that BT as a whole will be a loser and that the consumers and possibly the competitors of BT are likely to be winners. But at the moment we just don't know the answer to that question." For the moment, markets see a positive answer for the parent company at least - BT shares up four per cent in early trade. UK regulators say the reforms should be in place this year.