Sky and Vodafone resume Ofcom lobbying over BT Openreach

A group of companies, which includes Sky and Vodafone, have written to Ofcom boss Sharon White to propose ways in which Openreach – BT’s fixed-line wholesale division – can be improved.

The other members of the ‘industry coalition’ are TalkTalk, the Independent Networks Cooperative Association (INCA) and the Federation of Communication Services (FCS). Together they claim to represent ‘the interests of the majority of consumers and businesses that rely on Openreach,’ and ‘…the builders and operators of the UK’s next generation digital networks, as well as companies which deliver communications solutions to hundreds and thousands of organisations both big and small.’

Unbowed by this heavy, self-imposed burden the group has also found time to give Ofcom a hand with the tricky business of regulating Openreach, from which its members lease their fixed-line infrastructure. The group notes Ofcom’s decision in February to require further reforms at Openreach and is presumably concerned that BT doesn’t share their sense of urgency on the matter, so is seeking to move things along.

The proposed changes to Openrach take the form of a ten-point plan, detailed below:

Reforming Openreach’s governance so it can act independently

Giving Openreach clear purpose and accountability by:

  1. Establishing Openreach as a legally separate company
  2. Creating an independent Openreach Board
  3. Creating an independent body to oversee the transition and act as an adjudicator

Giving Openreach the tools it needs to succeed

Creating a confident and ambitious Openreach that has the autonomy to plan for the future by:

  1. Giving Openreach full control and ownership of its assets
  2. Ensuring Openreach has its own standalone corporate identity and brand
  3. Allowing Openreach to be financially independent and make its own investment decisions

Creating an Openreach that delivers for all

Making sure that Openreach serves the whole market fairly to improve choice, value and quality for its customers by:

  1. Providing all Openreach services on the same basis, no matter the customer
  2. Ensuring that Openreach consults with all of its customers about its future strategy and proposed investments
  3. Introducing competition to Openreach by making BT Consumer’s procurement truly contestable
  4. Ensuring that Openreach does not inhibit investment by independent network operators

These ten points can easily be condensed into two, which are the same ones they’ve been making for some time: take control of Openreach away from BT and make sure it treats all customers equally.

As ever, BT doesn’t see things that way. “We are in talks with Ofcom, discussing constructive ideas to further enhance the independence of Openreach from the rest of BT Group,” said a BT spokesperson in a statement. “Key suggestions made by other companies today seem incompatible with the legal responsibility that the Board of any listed company has when it comes to stewarding shareholders’ money responsibly.”

Sky has published the full ten-point plan here and Ofcom will feel obliged to at least acknowledge it, with the group’s decision to go public further adding to that pressure. It still seems unlikely that Ofcom will take control of Openreach away from BT and the strategy of Sky, Vodafone and co has now switched to trying to ensure any further conditions imposed by Ofcom are as stringent as possible.

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  1. Avatar David Alldritt 16/05/2016 @ 2:19 pm

    Strange response from BT, but not unexpected for them to be aggressively defensive of their cash-cow. It is precisely because Openreach is run for the ultimate benefit of BT Group shareholders that there is a conflict of interest which functional separation has failed to resolve. The CEOs who signed the letter to Sharon White are of course aware of the responsibilities of the Board of any listed company, and in the very first point in their 10-point plan have stated:

    To provide clarity for the independent management team, Openreach’s Articles of Association must clearly state the company’s purpose. For example, this could be “To operate and manage the fixed-line access network and ancillary network facilities and invest in, develop and provide these on an equivalent basis to all communications providers.”

    You could argue that such articles would hinder investment and the independent Openreach would have little share value, but it wouldn’t hinder it’s ability to make profit, return some to BT Group plc (as 100% shareholder) and still make the investments in the network, people and systems which under BT Group’s stewardship have been lacking. They wouldn’t have to fund the acquisition of TV rights for football, so should have a couple of quid left for proper fibre builds and adequate engineering resources.

  2. Avatar Eric Witheridge 16/05/2016 @ 3:57 pm

    We have recently experienced 100% failure of installation of both Fibre and ADSL for customers due to ‘problems with the line’. When we finally got Openreach to acknowledge there really were problems at the sites it has taken up to 5 visits to resolve the issues.
    A comment was made in hearing of one of our engineers to the client ‘Oh well, if you’d used BT this would never have happened!

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