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UK comms regulator Ofcom has announced how infrastructure unit Openreach will be held to account, as it becomes legally separate from BT, to ensure it delivers for phone and broadband users.
Ofcom expects the reformed Openreach to engage with industry to deliver widespread fibre networks, offering fast, reliable broadband. The new company should provide a good service to meet the needs of all the people and businesses who rely on its network, together with a step change in quality of service.
BT agreed in March 2017 to Ofcom’s requirements for the biggest-ever reform of Openreach, its network division. The changes mean Openreach becoming a distinct company with its own staff, management and strategy, and a legal purpose to serve all its customers equally.
Ofcom will closely monitor BT’s compliance with its new commitments, and how effectively Openreach serves the whole industry. Ofcom will measure how far Openreach is improving its network and helping to deliver better quality of service.
Should it become clear the new Openreach was not working, or BT was failing to comply with its commitments, Ofcom would revisit the model and consider new measures to address any concerns.
Progress so far
Since March, BT and Openreach have taken positive steps towards implementing the new commitments, which Ofcom welcome. Openreach has a new Chairman and Board, with the majority of members having no affiliation with BT Group.
Openreach has set up its own compliance committee, and is consulting publicly on a new process for engaging with telecoms companies on planned services and investments.
How Ofcom will measure results
Ofcom will examine whether all UK consumers and businesses using Openreach’s network are receiving decent speeds, and the right service to meet their needs. Ofcom will measure, and report on, Openreach’s contribution to growing fibre broadband networks, including ‘full-fibre’ lines which are currently available to only around 2 per cent of UK premises.
Ofcom expects Openreach to be responsive to different models of investment proposed by its customers, including co-investment and risk sharing.
Ofcom also wants to see a step change in telecoms quality of service. Accordingly, it will report on Openreach’s repair and installation times, and whether engineers are turning up on time.
How Ofcom will monitor compliance
Ofcom is establishing a dedicated Openreach Monitoring Unit, to monitor whether the new arrangements are implemented successfully.
The unit will assess whether new governance rules are being observed, and whether Openreach is acting more independently of BT, making its own decisions, and treating all its customers equally.
It will consider whether BT and Openreach are living by both the letter and the spirit of the commitments, and creating a successful culture that values Openreach’s independence.
Ofcom will publish its findings six months after the commitments come into effect, and then every year.
This will include BT’s delivery on commitments in Northern Ireland, where Openreach does not operate. A new protocol will govern the relationship between Northern Ireland Networks and BT Group, to ensure people and businesses in Northern Ireland benefit from the new arrangements in the same way as the rest of the UK.
Sharon White, Ofcom Chief Executive, said: “The new Openreach will be built to serve all its customers equally, acting independently and taking investment decisions on behalf of all its customers.”
“BT has made positive progress towards implementing the reforms. Once they are complete, Ofcom will keep a careful eye on whether Openreach is working for telecoms users, ensuring BT and Openreach live by the letter and spirit of their commitments. If we see problems emerging, we won’t hesitate to act.”
Completing reform of Openreach is dependent on the Government amending the Crown Guarantee, which underwrites the BT Pension Scheme, so that it maintains pensions protection for members of the scheme who transfer to the new Openreach. The Digital Economy Act introduced a power to enable this change, and the Government is drafting secondary legislation to implement it.
After that, BT’s pension trustees would need formally to agree that Openreach will become a participating employer in the pension scheme. BT must also complete a consultation process for the transfer of employees to the new Openreach.
Once these are achieved and the new commitments come into effect, Ofcom has confirmed that it will release BT from its past ‘undertakings’.
In response, an Openreach spokesperson said: “We support Ofcom’s statement and we’re getting on with the job of creating a more independent Openreach. We’ve already made a lot of progress. Our CEO now reports to the Openreach Chairman and is accountable to the Openreach Board which has a majority of independent members.”
“We’re also working more closely with our CP [Communications Provider] customers and we’ve introduced a new confidential phase to our consultations with them. This week we unveiled our new, distinct brand which removes all references to BT Group.”
“There are still some preconditions that need to be met before Openreach is fully incorporated, but we’re acting like Openreach Limited already. We are committed to delivering better outcomes for UK consumers and businesses, including better service, faster speeds and broader coverage.”