Challenges Ahead for Openreach

In March this year industry regulator Ofcom announced BT had agreed to a form of separation of Openreach from BT but what does the Channel think of the plan and what lies ahead for new CEO Clive Selley?

So what is actually happening within the Ofcom/BT/Openreach agreement which is based upon voluntary commitments submitted by BT that Ofcom has said meet its competition concerns.

Once the agreement is implemented:

• Around 32,000 employees will transfer to the new Openreach Limited following TUPE consultation, and once pension arrangements are in place
• Openreach Limited will have its own branding, which will not feature the BT logo
• The Openreach CEO will report to the Openreach Chairman with accountability to the BT Group Chief Executive with regards to certain legal and fiduciary duties that are consistent with BT’s responsibilities as a listed company
• Openreach will assume greater independence under its own Board of Directors. This Board will set Openreach’s medium term and annual operating plans and determine which technologies are deployed, but within a strategic and financial framework defined by BT

So will this change actually make any difference?

Dave Millett at Equinox Business Consulting points out that it needs to be remembered that BT have fought tooth and nail against any reduction in their influence over Openreach for years.

“So was it a case of this was the least of two evils for them or that in practice they don’t think it will make any real difference and it just sounds good. Some key bits of details could point towards the latter.”

Openreach was fined a record £42m by Ofcom earlier this year for past abuses of a loophole to avoid paying customers hundreds of millions of pounds in compensation for ethernet delays. Its latest transgression is unlikely to be punished on the same scale.

This May it was revealed that BT faces yet another fine for service failures in its Openreach business, after customers for high speed ethernet lines suffered delays of more than six months.

Ofcom launched an investigation after Openreach failed to meet its target of installing 97pc of new lines within 159 working days.

Andrew Skipsey, Managing Director of reseller M12 Solutions told us that he has long been for advocate for Openreach being set free from close BT influence so that it can properly build infrastructure in the best interests of all the channels who sell to and serve business and residential customers.

“Now, they should be able to develop without the constraints of having to provide BT with huge sums to help subsidise BT Sport and BTItaly losses for example. With independence, will also come greater accountability and scrutiny associated with fibre build and service levels which can only be a good thing. Also I am sure that with clear leadership and direction the business will innovate better and improve efficiencies which, again can only help the channel.”

Colin Woods, Head Of Cloud & Connectivity Sales at swcomms, says that like all providers, we have long suffered Openreach’s high charges, poor service and failure to invest in the division.

“We want to be able to offer a decent service to our customers but have often been thwarted by Openreach delays and inflated costs. The ideal result will be more availability of business grade internet connectivity supplied with shorter lead times and lower prices for all customers. Historically Openreach appear to have focussed on the domestic market with only one home in 20 being installed outside the stated lead time compared to one in five businesses waiting beyond the advised lead time.

Rather than Openreach just working to serve the needs of BT and the domestic market, they must look after the entire industry and work equally with all providers, to serve our business community which will hopefully lead to a fairer marketplace. The split can only be viewed as a good thing. In fact, it’s about time.”