Ofcom slaps down BT’s latest attempt to dodge the Openreach bullet

UK telecoms regulator wasted no time reminding BT who wears the trousers after the giant telco unveiled a couple of supposedly independent Openreach board members.

Establishment stalwarts Sir Brendan Barber and Edward Astle have been appointed by Openreach to its newly-formed board, chaired by Mike McTighe. The board immediately had a meeting to show what a proper, fully-functioning board it is, and the meeting is thought to have gone well.

The fact that Barber and Astle are apparently employed by Openreach in no way affects their independence, whatsoever. For those bitter cynics still not appeased by this move BT has added Clive Selley, Openreach CEO; Clare Sadlier, Openreach CFO; and Simon Lowth, BT Group Finance Director to the board which will, as a consequence, be more independent than a hermit reading the Independent on Independence Day.

“I understand that customers sometimes feel let down by Openreach because we haven’t always delivered the service they expect or that we hope to provide,” said McTighe. “We have made a lot of progress since Clive Selley joined as CEO a year ago – for example on halving the number of missed appointments, making our fibre network available to millions more people and accelerating our plan to introduce a new generation of ultrafast technology.

“But we need to do more to re-build trust and credibility. This will be the Board’s focus and we are currently in consultation with BT Group about agreeing the plan to deliver better service, broader coverage and faster speeds for consumers and businesses across the country. We are determined to meet our customers’ expectations and to strengthen the autonomy, governance and transparency of Openreach to facilitate the delivery of better outcomes for everyone who has a stake in our business.”

Ofcom is having none of this. Having demanded the legal separation of Openreach from BT, Ofcom finally lost patience and grew a pair towards the end of the year, when it threatened to grass BT up to the European Commission. This was interpreted as BT’s last chance to ensure full operational independence of Openreach before the matter was taken out of its hands and today’s announcement is once of BT’s first formal responses.

“These changes fall short of our requirements for a legally separate Openreach that delivers for all of its customers,” said an apparently disgusted Ofcom spokesperson. “We intend to take our plans to the European Commission later this year.”

To be fair to BT it’s not immediately obvious what it needs to do to avoid trial by eurocrat. The only way for the Openreach board to be truly independent is for there to be no involvement by BT in its appointment or the compensation of its members. Surely all Ofcom needs to do is spell out precisely what is required to demonstrate independence and then BT either does it or not. Instead expect to see BT continuing to experiment with the bare minimum for as long as it’s allowed to.

One comment

  1. Avatar LAKH JEMMETT 02/02/2017 @ 2:02 pm

    An independent board is a corporate board that has a majority of outside directors who are not affiliated with the top executives of the firm and have minimal or no business dealings with the company to avoid potential conflicts of interests. An independent board is expected to provide vigilant oversight over firm executives to mitigate managerial opportunism and promote shareholder value.

    Only a separate listing and and a truly independent board is likely to satisfy the majority of the protagonists in this debate.

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