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Today is more disruptive on UK telecoms than the original BT privatisation
Tuesday 29 November 2016 08:47:24 by Andrew Ferguson

Disruption has both a power for good and for bad and Ofcom is hoping that the enforced legal separation of Openreach announced today will produce a national local loop operator that can invest MORE in pure fibre infrastructure and also improve customer service.

"Ofcom is pressing ahead with its plans to improve broadband and telephone services for people across the country, pursuing better service quality and encouraging greater investment in networks. Creating a more independent Openreach – which works in the interest of all providers, not just BT – is an important part of achieving this.

We are disappointed that BT has not yet come forward with proposals that meet our competition concerns. Some progress has been made, but this has not been enough, and action is required now to deliver better outcomes for phone and broadband users.

We are now preparing to notify the European Commission of our intention to implement these plans, requiring the legal separation of Openreach to make it more independent. Throughout this process, we remain open to BT bridging the gap between its proposal and what is required to address our strong competition concerns."

Ofcom on split

One of the problems with old-school regulation is that it takes so long to make a decision and with the campaigning for Ofcom to carry out a split it feels like this has been going on for a couple of years, alas Ofcom is still holding out a small branch of peace to the BT Group.

Openreach will still be a fully owned subsidiary of BT Group, or put another way Ofcom has not gone for the most difficult option that was likely to be mired in years of legal battles where the only winners would be law firm profit margins. The evening before Ofcom published its decision the first ever Chairman of Openreach was announced, Mike McTighe who will take his seat in January and with eight years experience of Ofcom should be well used to the way the regulator works.

The legal separation does not mean the new Openreach is off the leash, it will remain a heavily regulated operation and possibly even more so, as decisions by the Openreach Board will be watched by Ofcom to ensure no undue influence from the BT Group exists.

The question moving forward now, is as a wholly-owned subsidiary how much new capital will Openreach have access to and with BT Consumer/BT Wholesale still its largest single customer by some margin how this will translate into influence on Openreach decisions.

The campaign by TalkTalk and partners is recognised by Ofcom announcing it received 90,000 identical submissions to the consultation and a further 4,000 non-standard responses with concerns over speeds, fibre availability and quality of service from various providers.

The massive unknown is whether this means a scrapping of and a pure fibre to the premises roll-out as Openreach adopts a 100% pure fibre future, but even if this was announced today the key would be the delivery timescale and the extra work involved is unlikely to resolve the complaints about service levels in the short to medium term. Alternatively it may be business as usual at the coal face, and existing roll-out plans announced will continue as it will take time to steer the ship down a different course.

Update 9.45am Sky has issued a response:

"Let's not forget why we are here - BT Openreach has continued to fail consumers. This is why we have always said that we want a solution that is clear and executable and in the best interests of consumers and industry. We will now watch closely as to how Ofcom executes its proposals."

Sky spokesperson on legal separation

Update 1pm A statement from ITSPA arrived earlier, but was delayed while we ensured broadband package listings were up to date post Black Friday Sale.

"Members of ITSPA are pleased that Ofcom has so far held its ground in relation to both a voluntary plan from BT that didn’t address all their concerns, and the more radical calls for a riskier full separation. Whilst we are aware of the range of opinions across the industry, and indeed amongst some members of ITSPA, in our opinion the proposals have a chance of delivering the fastest and least disruptive reforms to Openreach’s practices. This should result in improvements in Ofcom’s performance, service levels and reduce costs for both individuals and businesses in the UK.

Despite ITSPA’s support and preference for legal separation, the option of full structural separation should not be completely ruled out if the reformed Openreach still suffers from the same issues regarding performance as it did prior to legal separation."

Eli Katz, Chair of ITSPA


Posted by TheEulerID 5 months ago
The investment case for and against is surely completely unaffected by this as there still has to be a viable commercial model. The uncertainty and regulatory interference issues are another thing.

They are also going to have to come up with some way of untangling the pension liability contributions. OR is a £5bn turnover business (with little room for growth - Ofcom are acting to reduce its market share). There is no vast untapped cash pile.
Posted by TheEulerID 5 months ago
I'd add, given this will Ofcom stop interfering so much with BT consumer? Will they, for instance, have less grounds for things like margine squeeze tests? Also, what about the responsibilities landed on BT Consumer alone at the moment, like the subsidises telephone & BB service for those on benefits or the duty to run phone boxes?
Posted by 961a 5 months ago
A bureaucrat's way of introducing more fudge and argument and probably less money for the sharp end.
Any sign of Sky and TalkTalk introducing more of their money into the infrastructure?
Posted by ValueforMoney 5 months ago
I do not get the link with investment. Why not re-balance the incentives on fibre versus current replacement cost of copper?
It has a touch of Brexit about it. You can understand some of the frustration giving rise to the action, but there is no analysis of the desired outcome.
Posted by baby_frogmella 5 months ago
Before FTTC/P came along, both Sky & TalkTalk had penetrated more exchanges with their all IP network than BT/OR. Around 96% of exchanges in the case of TT, yet BT/OR decided not to touch many exchanges (esp. rural) with a bargepole. That same all IP network is now being used for FTTx connections on Sky & TT. Point being that Sky & TT HAVE invested significant amounts in infrastructure.
Posted by WWWombat 5 months ago
Is an "all-IP" network the only way to measure investment? Sky and TT needed *a* network, BT already had one, and were investing in a pretty-much network-wide replacement.

Yet today, we hear of a single fibre failure taking out dozens of Sky exchanges. Was their "all-IP" network done on the cheap? Without enough resilience?
Posted by baby_frogmella 5 months ago
OFCOM: "Creating a more independent Openreach – which works in the interest of all providers, not just BT".
A good example of this bias towards BT is proved by the fact that Openreach FTTC/P fibre backhaul only terminates at exchanges where BT has 21CN equipment - blatantly ignoring other exchanges where other ISPs (Vodafone/Talktalk/Sky) have similar equipment, yet BT doesn't.
Posted by WWWombat 5 months ago
Dear Sky,
If the best interests of consumers is really in your heart, can you please explain why you changed all their care level packages without informing them?

Did you really ensure that their repair times would all be extended by 24 hours (while BT were making the opposite move) in order to save 60p?

As you are saving this 60p now, but your customers are the ones bearing the results of the change, how about reducing line rental for the reduction in service?
Posted by WWWombat 5 months ago
Whoops. I was wrong with that 60p saving. It is actually 20p that Sky saves.
Posted by ZenUser27 5 months ago

"or the duty to run phone boxes?"

I thought BT's USO on phone boxes ended many years ago? Most I have seen sit there not even in operation (or wifi hotspots only)
Posted by CarlThomas 5 months ago
Hmm no, they have to go through a consultation process before they can remove the phone boxes. Still obligations around them.
Posted by CarlThomas 5 months ago
@baby_frogmella The suggestion that TalkTalk have invested significant amounts in infrastructure given their network is largely leased is comical. Sky have certainly invested more, but mostly around the time they acquired Easynet.

Both pale into comparison with Openreach's FTTC investment, relatively modest as it was to peers.

The comment regarding GEA headends - in a number of cases Wholesale built 21CN to exchanges with GEA termination in mind.
Posted by CarlThomas 5 months ago
The choice of GEA headend locations was based around things like availability of power, space, and fibre. Guess what big considerations for 21CN are?

The other comments regarding all-IP networks, investment, etc, just indicate you've no idea what you're talking about.

When was the last time you heard about 10+ exchanges losing BT Wholesale broadband and telco due to a single fibre break?
Posted by CarlThomas 5 months ago
@TheEulerID - I would far rather Ofcom split off BT Consumer / Business, allowed BT Group to merge Openreach and BT Wholesale, along with TSO, and we can get some sanity here.

If they are serious about wanting efficiency that's where it's at. This strikes me as Ofcom's typical clueless politicking.
Posted by WWWombat 5 months ago
Having read the Ofcom page, I think this is actually just a continuation of the game of chicken being played by BT and Ofcom since July.

BT indicated in July that they would apply as much of the changes as they could, even without agreement, in 6 months. I guess the announcement of a chairman is one step in this path.

Ofcom have raised the stakes, certainly. Will BT back down? Or fight?
Posted by rtho782 5 months ago
How idiotic.

Most of BT Groups Pension black hole is from engineering staff, so will presumably stay with Openreach, with a much smaller turnover than BT as a whole.

Worst case scenario? Openreach cease all non-contractual (i.e. BDUK) rollout until the process is completed. I could see them doing this.

The pointless resellers (that do nothing but sell the same product with a different label) would be happy with this, the ideal outcome for them would be zero progress, so they can just keep selling the same products with no changes.
Posted by baby_frogmella 5 months ago
So how on earth have the likes of Vodafone, Talktalk and Sky found enough space/power/fibre to connect exchanges to their fibre backhaul yet BT can't find space in the same exchange?

As for TT investment, they've spent 600+ million on their backhaul (leased or owned) and while it may be dwarfed by BT's its still a significant investment.
Posted by TheEulerID 5 months ago

So you think OR should go around enabling every local exchange for GEA head-ends? That's simply a lunatic waste of money. Concentrating GEA head-end where there is major infrastructure is extremely sensible. It will also tend to be where all the other operators have major network interconnects too. It makes sense for all concerned.
Posted by CarlThomas 5 months ago
@baby_frogmella Find me one instance of where a GEA headend was put in place somewhere where an LLU operator didn't have equipment and we'll talk.

I think you're mistaking Sky/TT failing to purchase a CalbleLink in a timely fashion with Sky/TT not having anything in the exchange.

You just trumpeted that TT cover around 96% of exchanges. It'd be alarming indeed if Openreach built GEA headends in the 4%.

TL;DR IMHO you're writing absolute pap. Back it up with evidence please.
Posted by CarlThomas 5 months ago
@baby_frogmella Regarding TalkTalk's investment: So what? What does this have to do with anything? Does it justify in any way TalkTalk's addiction to the copper network they so allegedly despise as it allows them to sweat their LLU assets?

Sky spend 25.57 million a week on Premier League rights. This would deliver FTTP to over 51,000 premises.

I'm not sure that a company that spends enough on football rights to cover the UK's 3rd city with almost ubiquitous FTTP in less than 2 months can grumble too much about BT Group's allocation of capital.
Posted by Gadget 5 months ago
@babyFrogmella - just to correct you Talktalk have not unbundled 96% of exchanges, but because they have chosen to bypass the smaller exchanges they cover a disproportionate (over 90% IIR of the population), and those that they have missed the vast majority have at least ADSL from a BTW DSLAM.
Posted by jumpmum 5 months ago
The ~1000 headend exchanges all have Sky and TT presence in them so the fact that they are 21CN nodes should be irrelevent as all 3 operators hit all the nodes. There is no excuse for not having Cablelink products ordered to cater for FTTC/P at any of these nodes and any operator susggesting that their connectivity should be at a different site is looking for an excuse for their own inefficiencies. These nodes were agreed industry wide in 2004-6 by all operators.
Posted by Icaras_ 5 months ago
People who think this will be easy and not cost a fortune should read this link. It's a submission from the union that represents staff to Ofcom. Specifically the assets section. It's incredibly complicated and as I see it will cost a fortune that could have been spent on broadband infrastructure.
Posted by Icaras_ 5 months ago

@baby_frogmella Your comments about the amount of money that TalkTalk and Sky have spent on their network are laughable. You do know that most of their network between the exchanges is leased from BT Group don't you? Go to almost any exchange and try and spot a manhole cover that says TalkTalk or Sky on it, you'll be doing a lot of walking!
Posted by TheEulerID 5 months ago

If I was in charge of BT I would have a contingency plan to float BT Consumer, GS and EE. I'd also think about my own version of BTW. I'd also seek to buy out of pension debt liabilities.

That would leave BT group as BT OR and BTW plus some share of headquarters. Very possibly it would include the Adastral operation too.

IT might be a real mess though IPRs, software licences, data centres and so on. The business does have separate operational systems, but not separate data centres.

Posted by bcs 5 months ago
Careful what you wish for.

Further, to have Dido Harding say this is just staggering.

"Openreach has been letting consumers down for far too long, unable to meet promises of even minor improvements and becoming a household name for all the wrong reasons"

Replace Openreach with Talk Talk and say the quote is from Ofcom and you wouldn't think twice.
Posted by Blackmamba 5 months ago
Hi Broadband Watchers.
The ISP,s (500) are responsible for the service the customer pays for what ever the availability fibre or copper not Openreach (30k staff) the quicker the advertising livery (vans) is changed the better for the situation across the industry. If the customer is not satisfied change their ISP after checking the advertised contract speed data that is available.
Posted by ValueforMoney 5 months ago
@Blackmamba - change in Van Livery to what, 'a legally separate but still a BT Group compamy'. What would be the new description?
Posted by Blackmamba 5 months ago
Just " Openreach " contracted to All ISP,s and staff just Openreach from this I feel the public would divert their problems to their chosen ISP who are responsible.
I feel most people are not interested in the BT group just their own situation so you make it simple.
Posted by 2doorsbob 5 months ago
While it's great to hope for openreach being more on the customers side and to invest in the network rather that just putting share holders interests at heart.I can't help but worry that this will end up at the taxpayers expense , maybe if BT had not back peddled on fibre to pole /rn we would have seen a different stance with ofcom
Posted by fastman 5 months ago
2doorsbob -- not sure what you mean ny maybe if BT had not back peddled on fibre to pole /rn we would have seen a different stance with Ofcom

Posted by Blackmamba 5 months ago
Hi Broadband Watchers.
When the CEO of Openreach (30Kstaff) gives the order to start providing set post Codes to be advertised as having G Fast / fibre this I feel will happen in the coming month as back and forward filling on the FTTC,s nodes.
Please remember "Openreach" has control over the a availability services thus can control the money spend on these set Post Codes. Service on Demand.
Posted by andrew (Favicon staff member) 5 months ago
@Blackmamba Explain? How does control of a checker control the money spent?

Or is this some special plan you have to say demand a service and we will provide no matter what?
Posted by fastman 5 months ago
blsckmanba -- what are you on about !!!!

Gfast is in trail and remains in Trial nothing will happen until its is formally launched and then it will be a exchanged / aresa that make commercial sense

Posted by fastman 5 months ago
all service providers will be advises on any changes in an equivalent manner ie at the same time -- everying else is pointless supposition ansd most of time unhelpful
Posted by Blackmamba 5 months ago
Hi Andrews Staff.
If you refer to your GFast maps on TBB you have provided the GFast unit at the Cab and also highlighted the Post Codes that are in range , so by using just in Time method on the unit it is possible to pre open the address on the post codes off the checker. I would class this as GFast on demand. I feel the take up will be very low so you are only spending money where required.but covering many potential end users
Posted by andrew (Favicon staff member) 5 months ago
So you are making the suggestion that Openreach should run a demand led roll-out of

How does one stop someone just using a bot to screw with a demand led system? Trust me have seen enough schemes to know someone will do this.
Posted by fastman 5 months ago
blaclmamba I refer to my previous post - service providers will be advised and any live deployment and any changes in an equivalent manner ie at the same time -- everything else is pointless supposition ansd most of time unhelpful -- in this case very unhelpful
Posted by Blackmamba 5 months ago
Hi Andrews Staff. And Fast.
Fast. Each week Thur. "openreach " updates its Exchange list plus all ISP,s (500) are advised by Email when a FTTC is open even Gap funded ones.
Andrew Staff.
Today fibre is on demand at set locations so there is no reason that G/Fast can not be used in the same way. Costings at the location will effect the outcome skilled staff.
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