Ofcom OK's BT restructuring

Communications regulator Ofcom has accepted BT's offer of widespread changes to the way it operates its local network and deals with its rivals. The move spares the telco from the threat of break-up.

Ofcom said today it had accepted more than 230 separate undertakings made by BT, including the creation of a division to run its local network.

Ofcom CEO Stephen Carter said: "Ofcom is hopeful that this new approach to competition regulation will stimulate investment, innovation and sustainable growth in this critical industrial sector."

In a separate announcement, BT revealed that its new access services division would be called Openreach. It will be operational by January 2006, and will give all service providers transparent and equal access to the nationwide local BT network.

BT CEO Ben Verwaayen said: "This settlement is a defining moment for the industry and BT is totally committed to it."

"It offers a fresh start and means that companies will be able to focus entirely on their customers without being distracted by micro-regulation. It provides everyone with greater certainty and clarity. That, in turn, will release investment and innovation from which everyone will benefit," he added.

Ofcom's strategic review of the telecommunications market set the conditions for BT's organisational changes. In a report released last November, the regulator said it was unhappy that BT wasn't giving its retail rivals fair and equal access to its telecommunications network. At the time, Ofcom warned BT it would launch an investigation under the Enterprise Act, which could lead to the company's closure, unless it mended its ways.

Graeme Wearden writes for ZDNet UK