Customers should expect less-expensive and improved broadband service now that BT has agreed to legally make Openreach a separate entity. Openreach owns and operates the UK’s broadband network.

It has taken two years for BT to reach an agreement with Ofcom, the UK’s media regulatory agency, which sought to strengthen Openreach’s independence to increase competition and encourage the development of superfast broadband.

“This is a significant day for phone and broadband users,” said Sharon White, Ofcom’s CEO. “The new Openreach will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry – not just BT.”

Conservative MP Grant Shapps, who chairs the British Infrastructure Group, stated that Internet users should benefit from the agreement to separate Openreach from BT.

“There has been significant Parliamentary concern about the current setup, which led to 120 MPs backing a report calling for separation,” said Shapps. “Now, both BT and Openreach must focus on ensuring that the millions of UK customers receive better broadband.”

After the separation, Openreach will no longer be a BT brand. It will operate as a distinct company and will employ 32,000 people, all of whom will transfer from BT. To protect the pensions of the transferees, the Government plans to enact legislation that will extend the Crown’s BT pension guarantee to cover them.

Commenting on the agreement, BT CEO Gavin Patterson said: “I believe this agreement will serve the long-term interests of millions of UK households, businesses and service providers that rely on our infrastructure. It will also end a period of uncertainty for our people and support further investment in the UK’s digital infrastructure.”

The legal separation will become effective later this year.