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    Ofcom in Huge Shake-up of Openreach and UK Broadband, if BT Agree

    This is a discussion on Ofcom in Huge Shake-up of Openreach and UK Broadband, if BT Agree within the General Computing and Internet forums, part of the Community channel category; Ofcom in Huge Shake-up of Openreach and UK Broadband, if BT Agree - ISPreview UK A framework for the next ...

    1. #1
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      Ofcom in Huge Shake-up of Openreach and UK Broadband, if BT Agree

      Ofcom in Huge Shake-up of Openreach and UK Broadband, if BT Agree - ISPreview UK
      A framework for the next decade of UK telecoms and broadband regulation has today been set out by Ofcom, which will see Openreach improve service quality, become more independent and give rival ISPs more access to their cable ducts. But the regulator has yet to reach a solid agreement with BT and a split is still on the table.

      Naturally some of BT’s most outspoken critics, such as TalkTalk, Sky Broadband and Vodafone, will be displeased if not surprised to learn that the telecoms regulator did not push forward with the option of completely splitting Openreach, BT’s network access division, from the operator’s control. On the other hand Ofcom has managed to agree some useful changes, not least to Openreach’s governance structure, and it may deliver most of what BT’s competitors desire.

      The proposed deal aims to make Openreach more accountable and independent, which is to be partly achieved through the adoption of a new board that would also include several independent directors (jointly appointed by BT and Ofcom).

      The new board will have control over Openreach’s budget and strategy, although BT has yet to agree with Ofcom over the need for Openreach to also become a “legally separate company” and for Openreach to have confidential discussions with its customers without oversight by BT (further details below).

      However the regulator warns today that if BT fails to reach an agreement on these sticking points then they will “reconsider whether BT and Openreach should be split into two entirely separate companies, under different ownership.” Ofcom believes that its proposal will “provide Openreach with the greatest degree of independence from BT Group that is possible without incurring the costs and disruption – to industry and consumers – associated with separating the companies entirely.

      Sharon White, Ofcom Chief Executive, said:

      “We’re pressing ahead with the biggest shake-up of telecoms in a decade, to make sure the market is delivering the best possible services for people and business across the UK.”
      Openreach are generally responsible for maintaining, managing access to and upgrading BT’s national telecoms and broadband networks across the United Kingdom, which they’ve been required to do on a “functionally separate” basis since Ofcom’s last Strategic Review in 2005.

      By contrast the most recent Strategic Review, which posted its initial recommendations in February 2016 (full summary), found “evidence” to show that Openreach “still has an incentive to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems“.

      Ofcom also said that “other telecoms companies have not been consulted sufficiently on investment plans that affect them.” Since then a recent cross-party inquiry has further accused BT of not investing enough into its infrastructure (here) and the regulator supports the view that BT has been under-investing by “hundreds of millions of pounds“.

      BT has of course denied the accusations of under investment and point to their plan for deploying 300Mbps G.fast broadband technology to 10 million UK premises by 2020, with “most of the UK” likely to be done by 2025. On top of that they aim to roll-out 1Gbps FTTP to 2 million UK premises by 2020, but critics say this isn’t enough and that they should be doing much more FTTP instead of cheaper hybrid-fibre G.fast.

      So far Ofcom has already proposed a series of changes to balance the market, such as requiring Openreach to give rivals better access to its cable ducts and poles (details), a more independent governance structure for Openreach, tougher minimum service requirements and better information sharing.

      Easily the biggest challenge is over the issue of governance, with Ofcom hinting that Openreach could “become a ring-fenced, ‘wholly-owned subsidiary’ of BT Group, with its own purpose and board members,” which was strongly opposed by BT and an agreement has yet to be done. In that sense today’s proposal represents BT’s final warning.

      Highlights of Today’s Deal

      * Openreach to become a distinct company.

      Openreach should be a legally separate company within BT Group, with its own ‘Articles of Association’. Openreach – and its directors – would be required to make decisions in the interests of all Openreach’s customers, and to promote the success of the company.

      * Openreach to have its own Board.

      The new Board should have a majority of non-executive directors, including the Chair. These non-executives should not be affiliated to BT Group in any way, but would be both appointed and removed by BT in consultation with Ofcom.

      * Executives accountable to the new Board.

      Openreach’s Chief Executive should be appointed by, and accountable to, the Openreach Board – not BT Group. The Chief Executive would then be responsible for other executive appointments. There should be no direct lines of reporting from Openreach executives to BT Group, unless agreed by exception with Ofcom.

      * Greater consultation with customers.

      Openreach would be obliged to consult formally with customers such as Sky and TalkTalk on large-scale investments. There should be a ‘confidential’ phase during which customers can discuss ideas without this being disclosed to BT Group.

      * Staff to work for Openreach.

      Ofcom’s principle for the new model is that people who work for Openreach should be employees of the new company, rather than BT Group. This would prevent any real or perceived conflict of interest, and allow Openreach to develop its own distinct organisational culture.

      * Openreach to own assets that it already controls.

      Openreach should own its physical network. This would allow the Openreach Board to make decisions that depend on investing in, and looking after, Openreach’s assets. There may be costs in transferring assets or people to Openreach, which would need to be mitigated.

      * A separate strategy and control over budget allocation.

      Openreach should develop its own strategy and annual operating plans, within an overall budget set by BT Group.

      * Independent branding.

      Openreach should have its own brand, not affiliated with BT Group, to help embed the organisational culture of a distinct company.
      One of the key questions in all of this is whether or not the changes will truly make the UK’s market for broadband connectivity more competitive, innovative, accessible and fair. The regulator is clearly trying to encourage more competition for BT at the infrastructure level, albeit without breaking BT itself into pieces, but even this won’t be enough to silence some of their fiercest critics.

      Similarly not all of Ofcom’s ideas have been given a warm welcome by BT’s rivals (e.g. the semi-separate Dark Fibre proposal) and it may take a fair few years before we can truly gauge whether or not the scale of competition has significantly improved beyond existing levels of growth via ISPs like Gigaclear, Cityfibre, Hyperoptic and others. Meanwhile Sky has already said that it has no plans to build their own fibre optic network (here) and TalkTalk’s aspiration to deliver FTTP to 10 million UK premises continues to lack a firm strategy and financial foundation.

      Elsewhere some of the measures, such as the new requirement for Openreach to consult formally with customers such as Sky Broadband and TalkTalk on large-scale investments, might potentially slow down the introduction of new products and services.

      In the end Ofcom has attempted to balance a multitude of competing interests in what remains a highly complicated market. No one solution will deliver the magic bullet that people expect and that’s particularly true for rural areas, which with a few exceptions (e.g. B4RN, Gigaclear) will always be stuck at the back of the pack due to the high cost of commercial upgrades.

      Suffice to say that we might well be back to this question again in another 10 years’ time, but in the meantime we can at least look forward to further service quality improvements, new systems for consumer compensation following major faults and an ever expanding choice of alternative broadband networks. Meanwhile BT faces an agonising week, with Ofcom attempting to force through some major changes that they clearly won’t enjoy.

      Ofcom are seeking views on the plans outlined today by 4th October 2016. In the meantime they’re also working to develop stricter minimum requirements for Openreach to repair faults and install new lines more quickly (a statement on this will follow later this year). Ofcom also intend to publish new performance tables from next year that will enable consumers to compare ISPs by quality of service over a range of measures.
      Edit: More from Ofcom...

      http://media.ofcom.org.uk/news/2016/...-openreach-bt/
      Last edited by Scubbie; 26-07-16 at 09:04 AM.


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      Re: Ofcom in Huge Shake-up of Openreach and UK Broadband, if BT Agree

      Statement from Sky on proposed Openreach reform

      https://corporate.sky.com/media-cent...enreach_reform
      Jeremy Darroch, Group Chief Executive, Sky said:

      “Today’s proposal to create a legally separate Openreach is a step in the right direction, although falls short of the full change that would have guaranteed the world-class broadband network customers expect and the UK will need.

      In particular, leaving Openreach’s budget in the hands of BT Group raises significant questions as to whether this will really lead to the fibre investment Britain requires.

      At the end of the day, Ofcom’s changes will only work if they deliver better outcomes for customers.

      It’s now important that the changes Ofcom have mandated today are implemented rapidly, fully and without dilution. We are encouraged by Ofcom’s stated commitment and willingness to use its powers to hold BT’s feet to the fire.”

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      Re: Ofcom in Huge Shake-up of Openreach and UK Broadband, if BT Agree

      Openreach being separate from "BT" is a small step in the right direction.

      I've always felt uncomfortable when speaking to Openreach installers, that they get cheap BT TV deals (since they are part of BT) and say that Sky is crap to people they visit (lots of people told me they have said this). They need to be separate or be offered cheap deals from all the providers they work for (not just BT - or Sky or talktalk or EE or eveyone else) to reduce bias.
      Please note the views and recommendations in my posts are my own and in no way reflect the views of Sky

     

     

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