Why Splitting OpenReach off from BT won't work
There are strong economic reasons why splitting OpenReach from BT is a bad idea. The fact that BT retains a majority position in both the fixed line telephone and broadband markets means that there is value for them in investing in OpenReach and pushing out new infrastructure to areas where the likes of Sky, TalktTalk and others don't want to play.
For BT, this means that there is money in putting in new cabling, cabinets, etc. via OpenReach as there is a return on their investment since they will pick up pretty much all the customers in the remote and rural areas which whilst not massively profitable to offer additional margin and revenue which is cheap to capture in terms of marketing and also cheap to retain. The situation also means that the Govt can put pressure on BT to deliver services to the more rural and remote areas of the UK by threatening to take away OpenReach.
If OpenReach is taken away then Sky, Virgin, TalkTalk and BT will focus all their investment where they will make money, cities, towns and larger village conurbations and say sod off to all other communities. The current obligations on BT to provide a Universal Service will also need to be removed as it would be unfair to force such conditions on one supplier when they no longer have the benefit and responsibility of the network to support such a Service. OpenReach of course would still have the obligation but will struggle as it would have have limited power to force the service providers to deliver the Universal Service unless the Govt makes it mandatory to a far greater level than is applied by Ofcom on Talktalk and Sky today. OpenReach will probably also find investment to build infrastructure in areas where the telecoms vendors refuse to play in any material way and so will park all their vans in the financially sound areas (won't be able to move in some towns for their vans) and smaller towns and villages will screwed.
The Govt will then shout and scream but as the "MARKET" is the key to ecomomic success, etc. the companies will simply tell them to get stuffed. Of course the Govt could legislate to resolve this as an issue but one can imagine the response they will get from the big pension companies, Rupert and others who will complain that the Govt is overriding competition and trying to create a new nationalised industry.