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Update: can Ofcom’s reforms fix the Openreach network?

Fixing broadband

Ofcom has set out plans for the future of Openreach, the broadband infrastructure network division of BT. But are these reforms enough to make a difference?

In February 2016 Ofcom published the findings of its Strategic Review of Digital Communications. The regulator said Openreach needed to be reformed and make more of its own decisions on strategy and budget, as Ofcom found that while Openreach has an obligation to treat all its customers fairly it still has an incentive to act in the interest of BT.

So after six months of discussion what has Ofcom announced?

Ofcom’s plans for Openreach

Ofcom has announced in its plans that Openreach should:

      • Become a distinct company within BT with its own ‘Articles of Association’ and its Directors should make decisions in the interests of all Openreach’s customers
      • Have its own Board with a majority of non-executive directors, including the Chair, and should not be affiliated to BT Group in any way
      • Ensure Openreach’s Chief Executive should be appointed by, and accountable to, the Openreach Board not BT Group
      • Consult more widely with customers such as Sky and TalkTalk
      • Employ staff directly rather than have staff employed by the BT Group
      • Have a separate strategy and control over budget allocation
      • Independent branding

Last week the Culture, Media and Sport Select Committee published a report which warned BT that unless the group reforms and addresses under-investment in the network then it should split from the Openreach network.

At the same time thousands of you were hit by outages across the BT network on Wednesday and Thursday last week with the company saying the issue affected 10 per cent of internet usage. BT Group apologised after fixing the fault on the network.

Ofcom has said that these plans for reform will help deliver ‘the best possible services for people and businesses across the UK’. But has the regulator gone far enough?

Taking action for better broadband

We know that many of you feel frustrated by your internet connection, which is why we want everybody to be able to access good quality broadband, be able to switch provider easily, and ensure automatic compensation is introduced if and when things go wrong with your broadband service.

It’s clear that Ofcom needs to move quickly on these plans and ensure Openreach is genuinely improving services for customers, many of whom have been let down for far too long.

Now is a perfect time for Ofcom to consider the greater role consumers can play in shaping Openreach’s future, as well as sharing their experiences and views on issues such as switching, compensation and a broadband Universal Service Obligation.

We’ll be pushing for many of these measures through the recently announced Digital Economy Bill which making its way through Parliament over the next year. But I want to hear from you.

Update: 30 November 2016

Ofcom has ordered BT to legally separate from Openreach. Back in July, Ofcom announced plans to make Openreach a ‘distinct company’ within the BT group. However, the regulator has found that while some progress has been made by BT, BT’s voluntary plan to address concerns it laid out earlier did not go far enough. The regulator will now start the process to force separation.

Under Ofcom’s plans, the separation would see Openreach manage its own branding and budget, with its own board, chairperson and non-executives that are separate to BT’s.

Update: 10 March 2017

BT has reached a deal with the telecoms regulator, Ofcom, to legally split from Openreach.

Openreach controls the fibre connections, ducting and pipework for the UK’s broadband infrastructure and sells access to other broadband providers.

The telecoms regulator has been preparing for a series of reforms to improve the Openreach service. Reforms have included a forced legal split of BT and Openreach.

Ofcom believes that the plans to make Openreach a distinct company will improve the service for Openreach customers. Openreach will have its own board and make its own strategy decisions, but the BT board will continue to set the annual budget as the 100% shareholder and owner of the company.

Our Managing Director of Home Services, Alex Neill, said:

‘Millions of people have suffered woeful levels of service from Openreach, so these reforms must lead to significant improvements for customers who have been let down for too long.

‘Telecoms are now an essential part of our daily lives, so it’s vital that consumers now really do see better phone and broadband services.’

Do you think this will improve broadband in the UK? Will this lead to better and faster broadband?

Comments

Last night I checked my speed with Virgin: 2.44Mb, this morning 35Mb. I’m paying for 70Mb

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Steven Pace says:
7 March 2017

I am with EE. The service regularly gets knocked off and some days it’s not worth the effort of opening my laptop, word of advice leave the provider well alone as they cant deliver nowhere near what they state they can.

[Sorry, your comment has been edited to align with our Community Guidelines. https://conversation.which.co.uk/commenting-guidelines/. Thanks, mods.]

Phil says:
9 March 2017

I’m with Sky and tbh I don’t really have a major complaint I pay for 40Mb?s and get that on a very regular basis. the major gripe I have is the pricing, I think its too high.
I pay £20 per month for my service and these days 40Mb/s is a standard considering you now have sky , BT and virgin reaching speeds above 70Mb/s. With all the online content the providers offer you in the way of downloading Box sets / catch up TV ” live streamed ” and other streaming services offered by them they should be lowering the price of their mid ranged fibre.

People often complain about not reaching the speed they are paying for, the major factor in this is the way they have their lines setup. what they don’t tell you is that your lines and bandwidth are shared with the rest of the street where you live, This is mainly BT and Virgin. a petition should be raised about the way the give you your broadband in the way as you pay for your line and your connection so it shouldn’t be shared with joe blogs at number 53 this is why a lot of people notice a major hit at peak times mainly weekends and tea times used to be the worst but now because of all the online streaming services this as moved to tea time and way after that.

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Bob says:
10 March 2017

I have complained to VM was told need there latest router of which I have received and installed I am supposed get 200mbps on there recommended BB speed test site Ockla reads above 200mbps bot all other speed test sites lucky to get 50mbps are virgin telling porkies? I think so.

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Maybe I am missing something but……..

BT have made a good income from telephone and internet customers which instead of using the money to improve the infrastructure have spent it on getting into the expensive world of TV and Football.

So how does Openreach get income? I presume a certain amount comes from providing support to other ISPs but is there enough income to make significant improvements to the infrastructure?

I know BT got a raw deal when they were forced to share the telephone network, but they don’t seem to have done too badly, and I wonder what hope there is now for customers stuck on slow internet connections when BT would appear to be on the side of the split with most of the money.

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If Ofcom had any real teeth, they would have made BT improve the infrastructure before venturing into TV and sport.

Imagine the possibilities. The money could be spent providing more customers with fibre broadband and some might think this was better expenditure of customers’ money.

3 years ago there were around 11 million Sky sat subscribers, and last year around 1.5 million BT Sport. As there are around 23 million households a good proportion will be paying for sport. As BT Sport is there to make enhanced profits for BT there would be more money to reinvest. I wonder how the split will affect that?

BT have had the income to improve broadband but spent it on TV and then expect the government to pay when the money could be better spent elsewhere.

BT have spent a lot of money to cause a reduction in service for Sky customers with the loss of Premier football and also the rights to other TV shows.

How are Openreach going to fund fibre broadband for everyone?

BT play the carrot and stick game with their services that may cost little to start with but prices will go up.

How is any of that good for consumers?

The money the government has provided for the roll-out of faster broadband has been used primarily by BT who have been doing just that. In fact BT was able to make the money go further than originally estimated and more coverage has been achieved as a result. A further tranche was awarded a few months ago towards the 95% coverage target by 2020. I assume this obligation will transfer to Openreach.

BT’s cable TV operation is an upstart that is separate from its broadband infrastructure roll-out obligations and it is, as you say, in head-to-head competition with Sky to win customers to its broadband services which it will no doubt exploit commercially wherever it can. It has been pulled up for charging subscribers too much who only use landline phone services and is adjusting its tariffs. Sky invested heavily in satellite technology from the 1990’s onwards and had the field to itself for many years; BT and other cable companies are trying to wrest back some of the market now that there is sufficient installed fibre optic cable capacity to make it commercially viable. So far as I am aware BT is carrying substantial losses on its cable TV operations at present as its acquisition of sports broadcasting rights is front-end loaded but it presumably expects the long-term revenue stream to repay its investment.

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BT and the others are called public companies because they are registered as PLC’s [public limited companies] which means their shares are openly traded on stock exchanges for anyone to buy. When BT was a nationalised entity it was not a company of any description but it was incorporated upon flotation.

The Post Office Ltd is a company but not a PLC as it is wholly owned by the UK government under the Department for Business, Energy and Industrial Strategy [Royal Mail is a PLC and the government no longer has any shares in it].

Sky is a PLC that is 39+% owned by 21st Century Fox which has made a bid to acquire the remaining 60+% which is awaiting regulatory approval.

Vodafone Group is a UK PLC.

And, yes, as Duncan rightly says, they are all there to make big profits.

Openreach will not be a PLC but a wholly owned subsidiary of BT Group with a separate corporate structure and physical detachment at every level albeit ultimately reporting to BT Group’s Board. I do not anticipate that if any profits accrue from BT’s TV operations they will flow in Openreach’s direction. Openreach will have to make all the money it needs from the charges it makes to the telecom service providers for which it provides network services [exchanges, cable, distribution cabinets]. BT will be but one of Openreach’s customers and it will be under a duty laid down by the regulator [Ofcom] to be even-handed between its different customers. Openreach will not have a direct trading relationship with individual telecom and broadband subscribers who will still have to raise any problems with their service provider. BT Group has no present intention of putting Openreach up for sale.

The roll-out of faster broadband throughout the country where it is not commercially remunerative is funded by the UK government. Up to now BT has undertaken most of the work through Openreach. I presume that from now on Openreach will have full responsibility for doing it in liaison with BE&IS or the government might put it out to tender. Where it is commercially lucrative I would expect BT and the other service providers to undertake directly, using Openreach or other contractors, further extensions of the fibre network including in new housing estates and commercial developments.

I hope this clears that up.

Thanks John, clear as mud.

Yes, Alfa, I agree. I don’t pretend to understand the muddle but I do try to state the facts to avoid mistaken speculation.

An excellent summary John. BT / Openreach as far as I know had no obligation to provide broadband except upon their own terms – there is no reason why they should subsidise it. That is the job of others if they feel it worthwhile.

If the large organisations don’t stick to what they sell themselves as then how can we blame those less able cutting corners to make ends meet – instead we send them to prisons etc. Even trying to complain to these organisations is made so difficult that half the time, I am sure (I certainly do) people give up so it does not even show up in their stats.

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Pigs are going to fly before Open Reach actually reach 3rd world standards. Example 5 weeks to repair line down and 10 meg download and .7 up load and that living within the M25 with a good following wind

All broadband users are paying a tax for broadband about 50p per month brought in by Gordon Brown years ago Mine has not got any faster its about 3.5 meg which is disgusting this day and age. They blame the lines So put up a new line easy fixed.

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Jack – I would guess that the government has spent more on rolling out faster broadband than the £6 a year per broadband subscriber collected through the telecom tariffs [probably no more than £100 million a year nett].

I really don’t understand how the industry have been allowed to make an asset of ‘selling’ the ‘maximum speed’ of the broadband, when it seldom achieves it for most people AND that says nothing about the issues I regularly experience with issues of contention / reliability. I’ve had it explained to me by a friend, it’s a bit like a water pipe. You can have high pressure water that travels at high speed but if the pipe isn’t big enough there will never be enough volume (reliability). By all means ‘sell’ the speed but also identify the reliability of service / volume.

MoggerhangerMark says:
18 March 2017

I have FTTC, was only 8Mbs with constant issues, BT OpenReach came out (arranged via my ISP), the helpful and brilliant OpenReach engineer re-terminated all the connections on telegraph pole, my house and back to the green cabinet and BINGO – 25Mbs all the time, and stable.
The joins in the copper cables are weathered over time and this is a big problem for OpenReach (so I’m told…).
The moral of my story and many others, is good quality BT street cabling is essential for reliable and fast broadband. For us customers, you can check:
+ If you notice crackling on your phone line, just listen to the ‘off hook tone’, should not be any crackling.
+ If you’re somewhat techie, you can see the ‘single to noise ratio’ on your modem/router, you can work out that the ISP is automatically reducing your speed because the line is poor quality.
+ Leave your broadband equipment turned on all the time, the ISPs continually check for line quality and adjust customers.
Report to your ISP, my ISP had good monitoring and could also tell straight away there was a problem – insist they call OpenReach.

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K Baz Ramsbottom says:
21 March 2017

I have been an internet user since the 90s when we had a dial up modem. Over the past 5 years the service appears to be dropping but the price keeps increasing. Our provider is Virgin Media and we even have issues even though it is a truly fibre network. OFCOM get something done about this inferior service.

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I am with sky on the ordinary copper telephone wire, I am paying for 17mb speed, I get 5mb if I’m lucky, seems reasonable to me that sky should knock two thirds off my bill as I don’t get what I’m paying for.
I can dream…

Patricia Marchand says:
12 April 2017

One wonders who in Parliament benefits from BT (dare I say shares? like with capita)
Really it is not just the speed it is the lack of services we all suffer, cannot contact our services providers because they don’t know what to say and cannot obviously accuse openly BT for the lack of services, telephone and broadband (if one can call it that). Poor services, poor technology underlined by no protection for us, the clients.

The good thing is that BT no longer has a monopoly and other telecom service providers are available., Patricia. A downside of privatisation is that it is no longer possible for an MP to raise a question to the relevant Minister [Postmaster General as was] about subscriber telecoms services. I expect if any MP has a problem with their own line they get a quicker response than their constituents do, so to some extent they are insulated from the normal experience, and that is probably true of any other aspect of their personal life. Being able to pull strings and make the puppets dance is one of the attractions of becoming a Member of Parliament – across all Parties too, I should think.

David Long says:
5 January 2018

I have a continual problem with the BT Open either not turning up or repeatedly coming without the correct equipment to fix my line. It happens almost every winter and sometimes has taken weeks to fix. When I went onto Infinity (fibre to the cabinet) I hoped that the problem would go away. Unfortunately there is an old overhead cable from the cabinet to my house. Every time there is heavy and prolonge wet weather water gets in and I loose my line and broadband. Their answer is always to bodge it. They fix just the bit of cable where the damage is but are not willing to change the whole dodgy length of cable. Madness because it must have cost them a fortune to keep on coming out to bodge it. I am not alone; why on earth has no-one started a support or action group to name and shame this incompetent organisation and either take it back into state ownership or split up the business so there could be an element of competition.

David Long says:
5 January 2018

I have a continual problem with the BT Openreach either not turning up or repeatedly coming without the correct equipment to fix my line. It happens almost every winter and sometimes has taken weeks to fix. When I went onto Infinity (fibre to the cabinet) I hoped that the problem would go away. Unfortunately there is an old overhead cable from the cabinet to my house. Every time there is heavy and prolonged wet weather water gets in and I lose my line and broadband. Their answer is always to bodge it. They fix just the bit of cable where the damage is but are not willing to change the whole dodgy length of cable. Madness because it must have cost them a fortune to keep on coming out to bodge it. I am not alone; why on earth has no-one started a support or action group to name and shame this incompetent organisation and either take it back into state ownership or split up the business so there could be an element of competition.

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Carole Gordon says:
12 January 2020

Get that wire off my flat and tv. Aerial