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BT: Independent Openreach nearing completion

July 24, 2018

By Colin Mann

The creation of a more independent Openreach Limited is nearing completion, after BT Group announced significant progress by starting formal consultation on the transfer of around 31,000 employees to the new legally-separate infrastructure business.

As reported by industry regulator Ofcom in June 2018, BT has been taking positive action since March 2017, creating the separate legal entity Openreach Limited, with its own independent board and strategy which serves all of its customers in the communications market equally. There has also been progress in other areas, such as removing ‘BT’ from branding, putting in place compliance procedures, and carrying out staff training on the changes.

The consultation with unions and employees is scheduled to finish by the end of September, with a planned transfer to Openreach Limited on October 1st 2018. This is the final phase in the creation of a more independent, legally separate business, focused on investing to ensure Britain remains at the forefront of digital communications.

“We are absolutely committed to giving Openreach greater strategic independence and ensuring it delivers the connectivity and service that homes and businesses across Britain need,” commented BT Group chief executive Gavin Patterson. “We welcome Ofcom’s confirmation in June that we’re making good progress towards legal separation, and are now delivering the final stage of what was agreed under the Digital Communications Review. Openreach now has its own Board, greater strategic and operational independence, and a separate brand. From October it will also have its own, independent workforce.”

“We will work with our partner unions to ensure a smooth transition to Openreach. It is an exciting time to join the company as it invests heavily in front-line customer service and spearheads the rollout of Britain’s next-generation digital infrastructure.”

Trade union Prospect says it will play integral role in the staff transfer, ensuring that there is a smooth transition which will allow staff to continue working in a stable environment with consistent pay and terms and conditions.

“This is a significant moment for the future of Openreach,” declared Prospect national secretary Philippa Childs. “Prospect’s experience in dealing with complicated and detailed work place changes means that we are best placed to advise any Openreach managers who will be affected by the process.”

“This is at the core of our work as a union and we are proud to be able to use our expertise to ensure that people are clear about what the changes mean to them. By ensuring that the staff feel confident and reassured about the future and the creation of Openreach we know that they will be able to deliver Britain’s next-generation of digital infrastructure.”

Separately Openreach has announced a new, supplementary wholesale discount structure for fibre broadband in return for volume commitments.

Openreach is offering long-term discounts which go beyond Ofcom’s pricing controls on its superfast broadband products. The new wholesale prices will be available to all of Openreach’s Communication Provider (CP) customers from  August 21st, giving greater certainty on prices for a period of three or five years. The discounts are available to any business – including small CPs – that grows its Fibre-to-the-Cabinet (FTTC) and Fibre-to-the-Premises (FTTP) customer base on Openreach’s superfast or ultrafast network by an agreed proportion over a three or five year period. Details of the pricing tiers can be found here.

BT anticipated market pressure on the wholesale prices of non-directly charge controlled products at the time of the Wholesale Local Access market review draft statement in February. An estimated range for this effect was included within its Group outlook for 2018/19. BT expects that the new pricing structure for fibre broadband is likely to have an adverse impact in the order of high tens of millions of pounds on Openreach’s revenue and EBITDA in 2018/19. The final net impact at Group level will depend on retail market dynamics. There is no change to Group financial outlook for 2018/19.

BT believes that the new pricing structure will allow CPs to encourage more of their customers onto better services and ultimately to move the vast majority of Britain’s homes and businesses onto superfast and ultrafast platforms.

Categories: Articles, Regulation, Telco