BT has unveiled an independent business unit called Openreach that will operate the telco's local loop and aid competitors in gaining access to local exchanges.
The local loop is the last mile or so of cables between local exchanges and landline phones. Many competitors claim that control of these cables gives BT's retail unit an unfair advantage in the provision of telecoms services.
Ofcom chief executive Stephen Carter said: "After a full year of detailed consultation, Ofcom has accepted BT's commitments. The new management of Openreach must now deliver - and be seen to deliver.
"Ofcom is hopeful that this new approach to competition regulation will stimulate investment, innovation and sustainable growth in this critical industry sector."
Openreach will employ about 30,000 people, most of them engineers recruited from other parts of BT. It will have its own headquarters and logo, but remain part of the BT Group.
"The local BT network is one of the UK's most important assets and my role is to ensure that everyone has equal access to it," said Openreach chief executive Steve Robertson.
Openreach will be the second largest unit within the BT Group by number of employees, and will have assets of around £8bn and revenues of more than £4bn.
Its performance will be monitored by the Equality of Access Board, which is also being set up by BT.
BT chief executive Ben Verwaayen said: "This represents the biggest regulatory change since BT was privatised more than 20 years ago."
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