BT has bowed to demands by the telecoms regulator Ofcom to Legally Separate Openreach, which runs the UK's broadband infrastructure.
It must consult with customers such as Sky and TalkTalk on major investments.
Ofcom boss Sharon White told BBC Radio 4's Today programme that "we can now expect better service from Openreach".
Openreach controls the fibre connections, ducts and pipes behind the UK's broadband infrastructure and sells access to BT's rivals, such as TalkTalk and Sky.
The regulator had threatened to force BT to legally separate Openreach.
However, Ofcom said on Friday that the company had agreed to all of the changes needed to address its competition concerns.
"As a result, Ofcom will no longer need to impose these changes through regulation. The reforms have been designed to begin this year."