/ Technology

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

I believe Ofcom’s proposal for Openreach to become a legally separate company but still within the BT group is inadequate. Openreach should become a fully independent company completely separated from BT – in my opinion it’s the only way to create a level playing field where all the telecoms providers (Virgin, BT Retail, TalkTalk, Sky, etc.) are treated equally by Openreach.

Furthermore, Openreach should move more towards FTTP (Fibre To The Premises/Home) rather than to the nearest street cabinet (FTTC) – the latter is cheaper but tends to be less reliable with slower connection speeds, using the existing decades-old copper wiring between the street cabinet and the home. Openreach need to accept that we are now almost 17 years into the 21st century, and should move on from wiring technology that dates back to the early 1900s!

This comment was removed at the request of the user

Good luck to those who believe breaking BT up completely will improve BB provision, the biggest whingers in this situation have invested zero into the Telecomms network yet want to reap the rewards of an ever expanding industry and I’m guessing they’ll cherry pick the bits that they want.

Somehow I can’t see TalkTalk, voda or sky providing large amounts of fibre to the areas that most need it but they will let BT do it and then want access to the dark fibre. A similar ‘sharing’ agreement was reached over access to poles but when the maintenance and replacement costs were discussed the agreement didn’t go much further.

BT have been slated in the press, mainly by the BBC, you know, that bastion of fairness and equality, and it is typical. A corporation that dominates its field by courtesy of free handouts of huge amounts of taxpayer’s money fighting the corner for the ‘little people’!!

That same company is using Openreach to provide a huge countrywide upgrade to their network, so while you are struggling to get fibre the BBC are getting state of the art stuff courtesy of your taxes and the very company they say needs to be smashed, ahh, the irony!

I’m yet to hear the main protagonists state how much they’ll put into providing the UK with a state of the art network but I do hear them whine like a child who’s missed out on a school yard toffee handout, be careful what you wish for, look at the state of the railways?

This comment was removed at the request of the user

Well, thankfully Will, Ofcom have stepped back from the proposal to split BT in half and the government – not BT – is providing the funding to extend the fibre network . . . . but it will not be state of the art, just a basic 10 Mbps capacity. If the other operators want to serve their customers with more fibre capacity and faster broadband they will indeed have to pay for it themselves and the cost will go in their price tariff.

Duncan – I am not sure why you are constantly worrying that UK companies would be sold to American companies whereas they could just as easily be sold to Asian or other European companies. We are a global trading nation and should not limit our horizons to the North Atlantic Ocean.

This comment was removed at the request of the user

I don’t think it will happen, Duncan, and even if it was a possibility I wasn’t thinking of China or India; it wouldn’t have to be a telecoms or media company either. There are big investors and investment companies in Japan, Malaysia, The Gulf, Australia, etc, and in many European states. Nowadays ownership is not the same as operations.

The current owners of BT Group can sell it to whoever they like subject to competition policy but there is one constraint: the UK government has a special ‘golden’ share that can be used to block a sale [although it cannot be used to force one].

Anyone know where we’re up to with the BT/Ofcom agreement. I can’t see the remaining issues being resolved unless ofcom move a little or bt take them to court;

1) Ofcom don’t want any kind of reporting line into BT Group from Openreach. Can you think of any other company who would let one of their child companies have totally no reporting mechanism back to the parent?

2) Ofcom want all openreach staff to be moved to the new company which will mean TUPE for 33000 people. The biggest and most expensive exercise of its kind in recent history. Don’t expect the unions to be pleased.

3) Asset transfer. I’m a bit unsure about this but I believe Ofcom want all appropriate assets to be transferred to Openreach. An incredibly expensive and lengthy exercise.

Division between Openreach BT Wholesale and R and D also likely to be big issues.

I don’t expect a resolution soon. Hopefully the European Commission will tell Ofcom not to be so silly.

In answer to the framing question. I don’t think this will lead to a better faster broadband.

According to the Update in the Intro “Ofcom has ordered BT to legally separate from Openreach so that is what it is going to do. I don’t believe the European Commission has any say in the matter as it does not create a new monopoly or intensify an existing market dominance. BT could well appeal on the grounds that Ofcom’s Order is unlawful but I suspect Ofcom has been well advised that it has the power to make the Order. There would be specified strategic reporting between the parent and the subsidiary regulated by Ofcom. I do not understand why the TUPE transfer of staff should be expensive; on transfer they will retain their existing terms and conditions of service and accrued rights. The transfer of assets can be made by a single agreement; it might take some lengthy and detailed drafting but is not unusual.

Nothing to be gained from the split. Yes, things need to change, getting more staff to complete the work, as many companies ‘too top heavy’! Sky, talk talk, et al, easy for them to shout, but who put the foudations of the telephone and now broadband network in? BT or rather the GPO. Virgin run their fibre along train tracks in the begining, where was sky and talk talk then? Greater regulation, time limits, increase staffing levels and get more work done in house.

John

BT has agreed in principle to the legal separation and have even appointed an Openreach chairman (Mike McTighe) but are arguing the detail.

Deutsche Telecom in their response to the Ofcom consultation said “We fail to see clear evidence that would justify such an extreme intervention, considering its impact on domestic and international property rights,” They also said the measures approached expropriation of a private company. Which is I believe the focus that BT will bring to the European Commission and to any UK legal case if they wished.

There is a submission from CWU and Prospect unions which I think makes their case better than I can on the issues of TUPE and assett transfer;

https://www.ofcom.org.uk/__data/assets/pdf_file/0026/94814/CWU-and-Prospect.pdf

Thank you, David, for that link to the trade unions’ submission to Ofcom. Ofcom will have given it fair consideration I hope; however, it has now made its decision and made the Order imposing a form of separation on BT.

I would certainly recommend the critics of BT and the UK’s broadband infrastructure to read that submission as it demonstrates how much progress has been made in the UK [almost entirely by BT] in building an advanced and comprehensive world-class telecoms network and it rightly criticises the lack of investment and development by BT’s service level competitors [except for Virgin Media in limited areas] . Ofcom’s remit was to consider the situation from the point of view of system users and, obviously, the trade unions have represented the issues from the points of view of their members and it was good to see that, at the principle and policy levels, there is a high degree of alignment in creating a good system for users and protection for workers’ interests. As you say, there is still a lot detail to be negotiated – much of which will be of little immediate interest to consumers – but the trade unions’ case has been well put and deserves to be respected where that is consistent with Ofcom’s overall objective. I presume that, now the decision has been made, Ofcom has a timetable for fulfilment of its Order subject to any intervention through the courts or at EU level.

John

Your belief in the sanity and objective judgement of Openreach is greater than mine. We shall see what transpires.

That should of course read;

Your belief in the sanity and objective judgement of Ofcom is greater than mine. (If Mike Rake can slip up between the two then so can I ;-).

I agree, it should be re-nationalised , I speak from experience as I worked for the GPO originally all the way through to Openreach , some 40 plus years in all . Everything went DOWNHILL after privatisation , customer service mainly and lack of expenditure in the Network , we had the technology and the infrastructure to have been World Leaders in Communication from the very onset of the Digital age ! Then came the awful treatment of staff in the frontline who had to bear the brunt of customers frustration at the service or lack of service that they were paying for . The GPO was the best service in the World in its day ,admired and copied by other Nations . All of those Staff were a dedicated conscientious workforce, now they get contractors in ,who have no real allegiance to the company or the customers.

This comment was removed at the request of the user

The Upshot of all of this, is that the privatisation of BT and, I suspect, of all utilities was a BIG,BIG mistake. “Who the hell in Government is going to admit this and put it right?

Looks like we shared the same work ethic with absolutely no respect or congratulations from management for getting a job done ,put you on a PIP and make you a poor performance member of staff even though you were doing more work in a day than the installation staff that were just fitting a socket and telling the Customer that they either did not climb poles or do underground and their job was done ? So that when a ” Multi skilled engineer turned up, ( US ) ! We got the Customers wrath ,or question’s as to what we were going to do ? As they had already seen 4 previous engineers who had done absolutely nothing . Oh ! Happy Times ?

This comment was removed at the request of the user

Openreach provides infrastructure but they (including BT) should be investigated.

My house got Virgin but not other provider but VM is expensive than other provider. I queried through FOI and got answer that in 2013 BT scrapped plan to upgrade my exchange cabinet because it’s not commercially viable for them and there is no plan to upgrade in future. Now that sounds like internal understanding between BT Openreach and VM.

VM has habit after 3 months they will put price up people like me without Openreach fiber miss out on competitive price.

I do think separating them is good for consumer and sooner it get split better for consumers.

This comment was removed at the request of the user

The stats on Openreach and BT are dismal in the extreme. BT – whose broadband division Openreach has been repeatedly been criticised for its poor customer service – is to hire 500 call centre staff in a bid to tackle complaints. On average, each week 14,000 consumers and small businesses waited longer than they should for broadband and phone line repairs and a further 11,000 experienced late installations, according to Consumer Advice.

In a press release they said “By hiring more customer service staff we hopes to answer “more than” 90 per cent of customer calls by March 2017.” That still seems a long time to wait for the call to be answered.

It might also have been a nice idea had they hired some technicians…

I know open reach workers and they were told years ago to rejoin breaks in the system, not replace any. This has been BT’s way since privatisation. The only way to get a better service is to cut all connection between BT and Open Reach. Giving penalties for bad work ethic to BT would also help.

This comment was removed at the request of the user

I have not read all 974 comments, but reading the latest Which magazine where Which states that BT are forced to split from Openreach as instructed by Ofcom – This is not true. First of all Ofcom does not have the power to force such a split as it will take a change of law/act of parliament to force BT to split from Openreach. Also the split in question is a Legal Split – BT has voluntarily created a separate Openreach Board with separate Chairman, board of directors etc. – ultimately the Openreach board will still have to report to the BT Board but have the caveat to make its own decisions. Ofcom are not satisfied with this approach but are still in negotiation with BT on what a Legal Split should look like.
Ofcom would rather prefer a Structural Split – the actual physical split of BT and Openreach and this is the sticking point with BT, after all why would any company be willing to sell of one of their major assets?
Ofcom has now written to the EU outlying their intentions for BT – not asking for EU permission – as Ofcom are still negotiating with BT.
Also those people who seem to think that BT was given a cash load of money from the government to install broadband and that BT have done nothing – remember that the BDUK programme was open to tender so any company could bid – however when the other bidders realised how much money they had to invest before receiving the cash from the government – they all pulled out except for BT. So far BT have invested billions in broadband and will continue to invest more.
I wish Ofcom would treat SKY in the same way as BT – no one moans that SKY has maintained its Football/Sports channels monopoly and seem to get away with it year after year.

This comment was removed at the request of the user

The problem is that openreach will still have a monopoly and openreach has no real driver to improve. What is needed is a firm get sorted or go to the top of openreach.

If Openreach were not a monopoly the Regulator would not be getting involved. Whatever we think of Regulators, recently Ofcom has been doing a good job in protecting consumers’ interests. It has the power to divide BT Group into a service provider arm and an infrastructure organisation, has made an Order to do that, and has approved BT Group’s plan. The government cannot sell-off Openreach because it does not own it. I have seen no evidence of the government wishing to see Openreach taken over by another company. Vodafone Group is a British company but it has shown no interest in acquiring Openreach.

This comment was removed at the request of the user

Yes, lots of telecoms companies have called for the break-up of BT, but largely to eliminate possible conflicts of interest in the market and not – so far as I am aware – with acquisitive intentions. Openreach is – and will be – still owned by the BT Group [which also has foreign shareholders] and is not up for sale. Obviously if Vodafone Group made an attractive offer the BT Group board would have to consider it but the UK government could block its sale on national interest and monopoly grounds. However, I think it is difficult to argue that one enormous British global company is less acceptable than another in terms of ownership of Openreach. I don’t know who own the majority of Vodafone Group shares; I expect they are pension funds, investment trusts, and other financial institutions.

Openreach needs to be separated from BT group because it makes a mockery of competition laws. I also think Ofcom & the government need to set much tougher speeds . My parents own an apartment in Spain and the the speed of the internet providers are offering there is 300mbs and they charge less than the UK providers and that when the Pound was worth more. BT are far from perfect a friend of my Dad keeps getting dates postponed and was even at one stage told he couldn’t have the higher speed service and then was told he could. BT receives 36 complaints per 100,000 customers which is higher than all the other providers. The advertised speeds advertised need to reflect the the average speeds up to is not good accurate enough .

This comment was removed at the request of the user

LK did not mention any sell-off, Duncan. I believe what he meant to say was that Openreach [the cables and fibres] and BT [the service provider] should be separated which is what BT Group have agreed to do with Ofcom’s approval.

As a matter of interest, do you know whether many of the British Telecom employees and pensioners have kept their shares in the company, and have bought more shares either at flotation or subsequently? Their combined negative could possibly block any adverse move.

This comment was removed at the request of the user

This comment was removed at the request of the user

It isn’t Telefonica’s network it was when the apartments were originally built in the 1990’s. however has been upgraded the since and several other providers own and maintain it. The apartment is situated in urbanisation . The point I was making even in parts of London companies who offices there complain about the lack of the speed which hinders their competitiveness . In many respects Spain is considered less and advanced yet there speeds are faster than many parts of this country. It is not Orange either it is local providers not the big multi nationals as you imply.

Judging from your response I knew you had vested interest

This comment was removed at the request of the user

Duncan you said you were a former shareholder and employee see your comment on the 24 December . If you had bothered to look on Wikipedia you would notice Telefonica is a private company listed on the NYSE. The company that asked the local authority to upgrade the network was Wikiker they are not a large multi national company.

This comment was removed at the request of the user

Duncan as a far as I am aware the Costa Del Sol . They could expand if they wished as they were given money from the EU . The speeds are higher as the fibre optic cable goes to the property unlike this country this is proper way in my way of thinking of making a better service that customers would want. Why can can customer based on the ISP’s web site ask the the fastest speed they offer to be told it wasn’t available in the that location yet when the customer complains about the slow speed you are told to upgrade to what was originally ordered the ISP keeps deferring when the customer can have it?

This comment was removed at the request of the user

I remember in the 1990’s when the original cable TV companies managed to cable-up almost all the streets in London without much fuss or nuisance. They used mechanical ‘moles’ to make the final bore from the cable in the street to the frontage of the property. This has mostly been taken over by Virgin Media now after the roll-out of cable TV was overtaken by satellite broadcasting. Not all towns and cities were cabled, of course, and virtually no rural areas, but it seems to me only a matter of time before the original cable networks are progressively extended and more households can have fibre to the premises. As Duncan says, it will have to pay for itself as, rightly, there will be no government money [let alone EU money] for such enhancements. Getting fibre to the cabinet remains the No. 1 priority. In many towns and almost all villages overhead wires remain the main method of reaching properties from the distribution cabinet but all new properties have underground fibre connexions and in many cases those passed en route are offered a connexion so the provision is gradually expanding under its own momentum.

You do have a point if an ISP says you can get high speed fibre RIGHT AWAY without checking out your exact location , now that is lying.

The customer lives on road that is adopted and is the freehold owner so that’s not an issue and I’m not lying just seems to me left hand doesn’t know the right hand is doing at the ISP.

I realise I won’t be cheap and may cause some disruption but if enough people realise the potential benefits I am sure they would agree to it. Communities could vote if there is a sufficient number then the work should be allowed proceed. I agree in parts of London where properties are bought as investments it could be prove difficult as you say. If individuals and companies complain about the current speeds like anything in life cannot be done be done free of charge. I am sure that the economy suffers because this country will be left behind .

This comment was removed at the request of the user

I have just BT after being disillusioned by Virginia media with their price increase. So I got in touch with BT, they told that they wold sort Virginia media their end, everything was going well until the 7th December, I was disconnected on the phone and broadband, not being connected until the 3rd January.
For 6weeks NO broadband having to use my mobile, which I’m on contract with Tesco mobile.
I’m not happy with BT whatsoever.

This comment was removed at the request of the user

Is there anything that BT can do right? They should be put under a very tight sort out or ship out. Unfortunately BT have managed to degrade our expectation of a phone service and so other companies do not have to make the service etc levels they should. Virgin would be bankrupt if they could not hide behind BT.

Denise it takes about two months from my own experience a five years ago and last couple a friend of my Dads made the mistake of cancelling his television, internet & land line contract and not choosing a new provider before he went on holiday and needing to return to home from his holiday home earlier than envisaged with out the internet which he found a bit of inconvenience.

Barry Bristow says:
30 December 2016

I live in Camber, East Sussex, best BT can provide is a broadband speed that varies between 4mb/s and 16mb/s.
This is their infinity service, so called presumably because it seems to take forever to download anything.
The only option BT can offer is free cancellation of contract, which, as they have the monopoly is really no option at all. Previously I was a Virgin customer in South East London, 70mb/s, those were the days.

This comment was removed at the request of the user

From memory I believe that on privatisation BT were handed the business pretty much free of charge .They have since provided a poor telephone service and a very poor broadband service. They have been pathetically regulated, and seem to have unlimited advertising funds, to the detriment of their competitors, and the improvement of the broadband service.

This comment was removed at the request of the user

I’m with plus net on unlimited fibre 40g some days I’m lucky if I hit 5…. I’ve done speed comparisons between my fibre broadband and the speed of my phone and there is a huge difference and my phone is extremely faster.. I’m seriously considering switching providers or i might just tether everything through my WiFi hotspot on my phone

I don’t agree with the split trouble is there are too many uninformed voices with an axe to grind or a business edge to gain . how naïve to have that Dido Harding (talk talk) deciding footsie reg,d bt big employer and faithful payer of taxes pensions etc etc the people who demand split have tried before for political (tory) reASONS OF GREED AND POWER TO BREAK UP YHE COMPANY but failed the privatisers just lust for easy money and are never around when the changes cause disaster. telecoms and i.t. services coupled to defence and sensitive customer sites and data protection rtc must not be given away to city spivs but must be in a form of oversight by a government body. ignore the pathetic money grabbing slickers and listen to sober level headed experts from the industry (people who work in the industry and know the pitfalls ).people whose expertise for planning , legal and compliance issues as well as circuit designers nad many many others . do not back this populist easy hit to satisfy some quick buck spiv ib a millionaires suit , tell them to go back to their swamp