Ofcom has ruled that BT’s Openreach division should become a distinct company within the group but NOT split away entirely.
BT has been accused of underinvestment in Openreach, which runs the UK’s broadband infrastructure of wires and cables.
However the media watchdog will look to ensure Openreach’s independence from BT as a legally separate company without going through a costly separation.
It will have its own board, branding and control over budget.
Ofcom boss Sharon White told the BBC that the changes will help get faster, more reliable broadband to more people.
Only two per cent of UK households are connected to fibre broadband, compared with 70 per cent in Japan, she said.
“I don’t think that’s good enough,” she told BBC Radio 4’s Today programme.
“This is a practical plan that can be implemented within months, unlike a sell-off of Openreach which would take years.
“This could bring about significant change. It will mean you have faster, more reliable broadband.
“It will mean engineers turning up on time and getting the job done first time.
“And crucially for the UK it will mean more investment in fast fibre to the doorstep.”
She added: “If BT doesn’t agree, we will use the rules and powers to enforce the change.
“We’re clear [that] we have the powers.”
BT chief executive Gavin Patterson said the report, published today, was “sensible” and will lead to “better” broadband services.
However the Government said a complete split “remains an option”, with a spokesman for the Department for Culture, Media and Sport saying “a more independent Openreach is needed to benefit consumers”.
Some BT customers suffered two days of misery last week after separate power cuts left customers and businesses unable to access the internet. Other telecoms providers such as Plusnet, reliant upon the infrastructure, were also affected.