BT has named the first members of the independent board it's setting up for its wholesale arm Openreach. However, the news quickly drew a response from regulator Ofcom, which said this is not enough to meet its demand for a legally separate Openreach.
Ofcom told BT last November that Openreach must be "legally separate", in order to put an end to concerns that BT's rivals were at a disadvantage when it comes to services over the Openreach network. BT has resisted the plan, proposing instead a new Openreach board with independent members, while still keeping the company part of the BT group.
Ofcom has said it was willing to discuss voluntary efforts by BT, but following the latest board appointments, reiterated that BT's plan was not enough. "These changes fall short of our requirements for a legally separate Openreach that delivers for all of its customers," an Ofcom spokesman said, adding that the regulator will send its plans to the European Commission for clearance later this year.
The new members of the Openreach board are Brendan Barber and Edward Astle. Barber is the former general secretary of the Trades Union Congress and current chair of the labour conciliation body Acas, while Astle is a former board member of National Grid. Both attended the inaugural meeting of the Openreach board on 31 January.
The board was chaired by Mike McTighe, who was appointed independent chairman of Openreach in December. A fourth independent non-executive is due to be announced imminently with a specific focus on customer service, BT said.
The board will be responsible for setting Openreach’s strategy, investment and overseeing its performance. BT said it discussed the appointment of the independent members with Ofcom, and the new board is central to governance reforms that Openreach has been implementing to become a "more transparent and autonomous business". The reorganisation programme will create increased operational and management independence for Openreach, and help rebuild trust and credibility among customers, BT said.
Openreach chief executive Clive Selley, Openreach CFO Clare Sadlier, and BT Group finance director Simon Lowth will also join the Openreach board. Selley will report to the Openreach chairman, with accountability to the BT chief executive on issues relating to BT’s responsibilities as a publicly listed company.
Openreach will also establish committees, including a new Openreach Board Audit, Risk and Compliance Committee (OBARCC). The OBARCC will hold the business to account and regularly hear representations from customers. It will also conduct an annual review of Openreach compliance and publish its findings.
