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Renewed calls for Openreach to be split into its own legal entity
Monday 16 May 2016 09:48:46 by Andrew Ferguson

When the BT Group CEO talks about investment and regulatory certainty being a pre-requisite of any investment plans this is usually a tacit reference to the recent Ofcom Strategic Review of Digital Communications. Ofcom in February largely chose the muddled route with stricter performance targets and an PIA Mark 2 product to keep competitors to Openreach and its large non-BT customers happy, but the publication of a 10 point plan by Sky, TalkTalk, Vodafone, INCA and the Federation of Communications Services suggests that many were not happy with the Ofcom decision.

"Our 10 Point Plan draws from a number of tried and tested approaches. It reflects best practice as outlined in the UK Corporate Governance Code. Several proposals are modelled on the proven independence arrangements which exist in other UK sectors including energy, media, rail, civil aviation and water markets. And we draw on the experience of other progressive countries such as New Zealand and Singapore, which demonstrate that reforms of this kind this can be achieved without prohibitive cost.

Nothing worth having can be achieved without some effort. However, corporate restructuring of this kind happens every day amongst large companies as they seek to better serve their customers. The creation of independent subsidiaries is commonplace, straightforward and can be achieved in a reasonable timeframe. These industry proposals can be implemented swiftly and will in our view deliver a step-change in the effectiveness of Openreach.

Extract from Industry Proposal

The ten points suggested to make this consortium of unhappy providers happy are:

  1. Openreach is established as a legally separate company
  2. Openreach has its own independent Board
  3. An independent body to oversee transition and act as an adjudicator
  4. Openreach owns and controls its assets
  5. Openreach has its own distinctive and independent branding
  6. Openreach is financially independent, with autonomy over its budget
  7. Openreach provides its services and information on an equal basis
  8. Openreach properly consults with all its customers on strategy, capital expenditure and product design
  9. Openreach is no longer the only provider BT can use
  10. Openreach does not inhibit investment by independent network operators

One of the complaints apparently made to some of the UK press over the weekend was that the recent change to Infinity 1 based around a 55/10 VDSL2 variant was not announced to providers before the launch by BT Retail, but this seems odd given that discussion and speculation was rife on various online forums as to who was going to use the new Openreach product which was formally announced in December 2015.

The Point 10 on overbuild is interesting, as it suggests rather than the pure commercial model a set of limited franchises could result, though if this is pure rural FTTP we are talking about then Openreach may prefer to forego those areas leaving existing exchange based services in place until the end of their life and in return seek a downgrade of a its existing phone USO and that the proposed broadband USO be shared with the smaller operators too.

We believe using Singapore as an example is very poor, it is an island of some 5.4 million people with a population density of over 7,000 people per sq km, higher than London at 5,000 people per sq km. Comparison with Singapore is fair is this ten point plan is aimed at getting FTTP to the urban parts of the UK, at which point it is less about breaking up BT and more about how new TV operators can compete with the established presence of Virgin Media. New Zealand may represent a better fit, but it is not hard when searching around to find moans and groans about poor service delivery and long wait times for the roll-out there, so maybe not the nirvana portrayed.


Posted by zyborg47 5 months ago
It should be split up, but it seems like the government is too scared, what is it our government being scared of big companies? don't answer, I already know what it is.
Posted by TheEulerID 5 months ago
There is another article in the Telegraph (a bit more informed than this sloppy stuff). There was a more considered article on 9th May by their chief business correspondent. The suggestion is that the EU (who have the final say) do not favour stripping incumbents of their networks.

nb. Sky, TalkTalk etc. don't seem to realise directors have duties to their shareholders.
Posted by andrew (Favicon staff member) 5 months ago
@TheEulerID in the eternal effort to improve, what part of what I wrote was sloppy?
Posted by Blackmamba 5 months ago
Hi Broadband Watchers
I have just received an Email from BT stating that my 40/10 will be upgraded on July the 3rd to 55/10 it is starting to look like BT is getting its advertising correct.
If this upgrade is being done it will increase the average TBB speeds across the country placing more pressure on other ISP.s to follow it also shows that congestion has been dealt with.
Posted by andrew (Favicon staff member) 5 months ago

What congestion? And how does an upgrade in connection speed show that this is supposed congestion is fixed?

Also should be highlighting that only the 10-25% who are hitting the max sync on the Infinity service will actually see an improved sync and therefore throughput speed.
Posted by TheEulerID 5 months ago

Apologies, I meant the Telegraph article where this stuff was published and complained about the ISPs not knowing about the OR 55MBps FTTC product (presumably they weren't reading their email in December).
Posted by themanstan 5 months ago
Ahh.. good old Chorus in NZ.... where the government realised early on that a coherent infrastructure based plan was needed, rather than a let the market solve the problems and focus on what's best for the consumer, whilst regulating for that and not realise that technology moves along faster than OFCOM can run a market consultation!
Posted by andrew (Favicon staff member) 5 months ago
@TheEulerID Thanks just wanted to check, as it was a Monday morning and sometimes brain goes faster than fingers can type.
Posted by TheEulerID 5 months ago
My fault. I'd just assumed that was the link (the story first appeared in the Sunday Telegraph). I don't know if they bother to check facts or just repeat what some less charitable types might call outright lies on purpose.

It also works the other way. Openreach produced a 40/2 FTTC product for TalkTalk and that was never picked up by BT Consumer (although I assume it's what Plusnet now use for their base service).
Posted by TheEulerID 5 months ago

The Chorus approach could never have been taken in the UK as it would undoubtedly fallen foul of the EU due to the presence of the VM network. Dealing with the regulatory and compensatory issues regarding that would have kept lawyers engaged for a long, long time. There would have been huge financial implications for the government.
Posted by 961a 5 months ago
Still not much in the way of what sort of money Sky and the others are willing to come up with

They natter on about Openreach being split off from BT but don't really provide a better alternative or the promise of the cash to achieve it
Posted by gt94sss2 5 months ago

I am pretty sure that more than 10-25% of BT Infinity customers sync at over 40MB so will benefit from an upgrade to the 55/10 tier - in fact isn't the average attainable FTTC sync speed about 60MB
Posted by andrew (Favicon staff member) 5 months ago
Who says the average attainable is 60 Mbps? If this was the case we'd expect the speed tests hitting the 38 Mbps limit to be much higher than it is.

Time will show the scale of the change.
Posted by gt94sss2 5 months ago
I think you have previously quoted 60MB as the average attainable rate (as have Openreach) :)

As you say, time will tell..

Posted by jumpmum 5 months ago
I read point 10 as Sky / TalkTalk want to be able to build their own network with no competition from OR in that geography to dovetail in with Point 9, BT Retail to use their network. I believe that the York ( City Fibre) experiment has proved to them that FTTP is only viable in an area where it has a monopoly.
Posted by TheEulerID 5 months ago
Attainable isn't necessarily the same as what is being achieved for all sorts of reasons (sub-optimal wiring for instance - I lost 40% in just plugging my modem into the master rather than the extension I use due to bridged tap issues). Then there's the issue of just what proportion of BT customers have gone for Infinity 2.

Perhaps when BT updates all the Infinity 1 speeds (I've had an email to say mine will change automatically) we'll see a change.
Posted by WWWombat 5 months ago
I think Shropshire BDUK quoted their average "available" speed as 50Mbps - suggesting that the commercial/urban-centric average is likely higher.

The 2014 graph from Ofcom suggests that ~ 48% of FTTC lines achieve their (just under) 40Mbps and are limited by package choice.

If the extrapolation is correct, then the median speed would be about 60Mbps, without package limits.

Who knows what BDUK, G.INP and crosstalk have done to change the shape since then.
Posted by WWWombat 5 months ago
According to the recent G.Fast article, TBB believe that 51.5% of lines have a D-side shorter than 300m.

TBB also reckons 300m is good for 45Mb (self-stating it to be pessimistic).

The Sagentia report reckoned median length was just over 400m, but there has been a degree of EO and all-in-one deployments, and copper re-arrangement that presumably reduces the average down.

I'd expect that length to be easily capable of getting 50Mbps. My own experience of ~ 375m was of 80Mbps /just/.
Posted by TheEulerID 5 months ago
The house I've just bought in the small Oxfordshire town of Charlbury is at least 450m for the cabinet and has a report achievable speed of 63 Mbps. Of course that's sync speed so attainable throughput will be no more than about 55Mbps.

The other house which I (temporarily) own syncs at 55 Mbps and that's 650 metres from the cabinet.

In any event, I think 45Mbps for 300m is very much on the pessimistic side.
Posted by Blackmamba 5 months ago
Hi Broadband Watchers.
Yesterday received a new e/mail from BT stating my new speeds also did I want to be upgraded to 80/20 and also a discount on my existing contract which I excepted. They said I would be upgraded on the 17 Th may this morning checked speed old was running at 37 new 43 a aprox 17% increase in speed.
I was advised by BT in the first place to use 40/10 due to my data use against cost on 80/20.
Posted by gt94sss2 5 months ago
@WWWombat thanks for looking up the data :)

@ TheEulerID I agree some of the assumptions made by TBB are very conservative as they admit themselves but perhaps better to surprise on the upside rather than having others disappointed if they have an 'impacted' line.

@Blackmamba if your line is only capable of 43MB, you would be better off with the cheaper 55MB Infinity 1 option, rather than Infinity 2 (unless you need/benefit from the higher upload speeds as well)
Posted by WWWombat 5 months ago
Ooops, sorry. I forgot to give a link to the sagentia data...

My extrapolation might not be correct. Here's one that can make the median speed 5Mbps better, and I'm sure I could come up with one to make it look 5Mbps worse.
Posted by CarlThomas 5 months ago
@Blackmamba what does your contract with BT or your own line's performance have to do with the subject matter please?

You seem to have gone from extrapolating Surrey to the rest of the UK to your own line.
Posted by Blackmamba 5 months ago
Hi Carl.
I did not request a speed increase to 50/10 from BT so I would think that it was going on in the rest of the country so they are effecting all the speed targets and services.
There is little difference between Cabs on the D sides where ever its location I feel it is the responsibility of the ISP to give the best speed and service they can afford that the line can support. (Long and Short).
Posted by CarlThomas 5 months ago
BTR are indeed doing an uplift cycle where they think lines will benefit.

It's nothing to do with the ISP what people receive, people pay their money and take their choice. Customer choice is important, ISPs can't refuse to sell 40Mb to people who can afford and receive 80Mb.
Posted by chrysalis 5 months ago
I think a way forward is to have openreach be the company that sells line rental to consumers direct, and companies like sky and BTr can sell calls and broadband but "not" line rental (unless they build their own local loop of course), this is a very good reason for splitting openreach off. The current arrangement with openreach unable to speak to end users directly is anti consumer.
Posted by fastman 5 months ago
chrysalis -- interesting view as part of the opemrech charter issed back in 2105 this was mooted as sure was discussed as the time however the service provider do not want Openreach to talk to their customers as all as openreach's customer is the ISP !!! - End user is a banned phrase !!!! -- however its all around who controls the customer and the ISP wants that !!!! -- they don't really wanted openreach branded kit in Home which is why you now have integrated hub and modem in a single box
Posted by fastman 5 months ago
sorry should have been 2015
Posted by chrysalis 5 months ago
really ofcom needs to grow a pair and say we dont care what you want we rule it will happen.
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