Ofcom to force a legal separation of Openreach The regulator Ofcom has decided to force a legal separation of Openreach from BT, after the former broadband monopoly failed to offer voluntary proposals that addressed its competition concerns. Ofcom fell short of recommending a full structural separation earlier this year, citing pensions and properties costs as the main …
At bloody last.
Seriously, why has it taken so long to notice this blatant conflict of interest.
There's a reason that we lag behind so many other countries who don't have this problem.
Break them up and then tell OpenReach that they have to supply every house in the country, and charge the same for all lines, to everyone who asks.
Then watch as BT die a death except with granny who wouldn't know who else to use, and has to start competing properly again, and lower their stupendous prices for what they offer.
Then, you might even be able to charge bloke-in-London an extra quid a month over what he'd have paid before to give bloke-in-the-middle-of-nowhere some kind of usable connection for the same price.
"Then watch as BT die a death except with granny who wouldn't know who else to use, and has to start competing properly again, and lower their stupendous prices for what they offer."
I did some IT work for a company offering white label broadband. The business guys there told me that BT was actually officially barred from offering competitive prices due to its dominance in the market....
I have worked in one of these supposedly legally separated environmments in the energy industry. And whilst us low level guys had all sort of strict ways of woorking to adhere to, and regulatory training to sign off on, I always had more than an inkling that in practise, at boardroom level, the supposedly separate legal entity got tonnes of preferential access to and influence from the group just by the general practicalitiess of sharing geographic locations and personal relationships between thee two boards.
Its a start, but probably not good enough. Theres no good argument for not doing complete separation.
Or another example is the stupidities of the power regulation system. In our area, SSE PD have the monopoly on infrastructure, for which, apparently, they are capped at a profit of 4%. We are off grid, but the power poles run just 70m from the house, so we asked for a quote. They said they would need to add a pole near our house, get a connection from the main lines to our new pole, add a transformer, and we would be responsible for a trench for the last 25m. For that they quoted an estimate of £13k plus VAT. They still make 4%, but on hugely inflated numbers they can dream up out of thin air. Expect the same logic when BT's main board requires the OR board to make a bigger contribution to overall profit.
We are off grid, but the power poles run just 70m from the house, so we asked for a quote. etc.
Friends of mine were in that position with BT regarding a data line (ISDN, this was before broadband). Pole & trench needed, pretty much the same as you, with a ridiculous quote. What if we did the work ourselves and you just string the cables, they said. Err, umm, well OK, said BT. So they hired a digger and a post hole borer, and did everything for less than a quarter of the quote.
To be honest, when you include union labour and health and safety, that's how much it all costs.
Two guys for the day will cost you nearly a grand.
Equipment to dig a hole, probably a grand again to hire.
Wayleave etc. paperwork will cost you.
Then you have safety equipment, a van to take them to site in, the digging itself, the ductwork, the cable, etc.
Not saying you can't do it cheaper, but you won't find another COMPANY that will do it cheaper, officially.
I work at a school that was going to be charged £20k+ to dig a trench the same. We got a local farmer to help do his half, and did the on-site stuff ourselves, and it wasn't cheap (we weren't doing it to save money, but to speed things up) for our part, and we still had to pay a load for their part, and that wasn't BT-related at all.
As soon as you get into liability for the works, it gets incredibly expensive as everything has to be done by the book where you or I would just get a shovel and start digging until our backs hurt.
That said, if it's only one pole away, I'd be paying a neighbour to stick a box on the side of their house and pay 50% of their monthly Internet bill for them, so they could upgrade it. Unlicensed spectrum is relatively cheap for Internet-access kind of speeds now, especially if you can have a directional antennae bolted to it.
Pole & trench needed, pretty much the same as you, with a ridiculous quote. What if we did the work ourselves and you just string the cables, they said. Err, umm, well OK, said BT. So they hired a digger and a post hole borer, and did everything for less than a quarter of the quote.
The main reaction has to be one of "good idea". However, there remains a likely long - term downside. Whilst BT may well have been happy to run the cables I suspect that they will not have assumed long term responsibility for the poles themselves or any trench work. So if anything happens to a pole (including falling over and injuring someone) then BT will simply shrug and say "not our problem chum". In addition any self - provided trench or duct may well not appear on anyone's maps (BT included!) so that if a U/G section is damaged then again BT will be able to say "don't expect us to open the trench", and the trench / duct "owners" may have trouble getting any damage done by a third party repaired at the third party's expense.
I'm not saying "don't use this approach" but just pointing out that the initial saving may finish up being eroded by long - term maintenance costs.
BT inspects its poles from time to time to make sure that they remain safe, and replace any that are showing signs of losing their structural integrity. I doubt if the company will undertake the same duty of care for privately installed poles.
Self - help may well require long term commitment to the project, and not just be a source of instant and enduring happiness for a reduced capital outlay.
"Expect the same logic when BT's main board requires the OR board to make a bigger contribution to overall profit."
The problem at the moment is that OR _IS_ the cash cow. Creative accounting is used to make it look sick but what happened in New Zeland when separation was finally forced showed how much of a fiction "sick lines companies" would be.
In particular one of the big things played upon was the pension liabilities (sound familiar) but in reality the separateed lines company has been going from strength to strength selling (regulated) service to all comers(*), whilst the old dialtone company is looking quite ill.
(*) Including duct access and dark fibre to "competitors" who wouldn't have been allowed through the door in the old days or in a "Seperate business unit" operation. Imagine a world where Virgin can run its cables though BT ducts to get to tall the areas where it can't currently go without tearing up roads and where 10Gb/s fibre only costs about 50% more what 1Gb/s does.
Theres no good argument for not doing complete separation.
There is but it depends on your definition of 'good'. As the article says there are issues arising from the BT pension scheme and properties that the group currently own. The properties issues are probably not the big problem. Rent can be agreed or property ownership transferred as required. No the big problem is the BT pension scheme. That is already in enough trouble without trying to split it off or agree joint liability.
"BT manages Britain’s biggest company pension fund, which has a £40bn war chest to pay employees past and present their retirement income"
I would also add that I'm a bit sceptical about how a completely independent openreach would get the funding it needs. A lot of money is needed. Many tens of billions of pounds. It's a easier to get that if you're part of a huge group of companies with a track record operating in an established market.
"Theres no good argument for not doing complete separation."
This is exactly why New Zealand's regulators chose that option.
And there's no need to go through court cases to force the issue - just make any further broadband funding rollouts conditional on the separation.
Good! Perhaps El Reg could investigate how much of the UK doesn't even have broadband, let alone FTTP :-(
In today's digital society, how can it be that I live 10 mins from Junc 8/9 of the M4 yet BT cannot provide me a regular broadband service - let alone anything 'superfast'? We live 11 km from the exchange and BT will not lay the infrastructure to provide broadband to my community as we're a small hamlet and are clearly not economically viable for them to do so. Perhaps we will get it now Openreach is to be split off..... here's hoping!
We live 11 km from the exchange and BT will not lay the infrastructure to provide broadband to my community as we're a small hamlet and are clearly not economically viable for them to do so. Perhaps we will get it now Openreach is to be split off...
And splitting off Openreach makes it economically viable how exactly?
other ISPs' criteria
Except that historically the other CP's criteria (leaving aside Altnets for now) has been more restrictive than BT's. The original LLU roll-out shows us that as does the size of VM's network. Has your exchange been unbundled yet? Have VM offered to cable your street yet?
Alnets have shown great willingness and ability to go where few others (even BT) dare to go but they are relying on exclusive access to their network and in some cases free local labour, friendly wayleave agreements and not caring about making money. That doesn't scale very well and it's hard to see how openreach could get involved there in any shape or form.
"They can roll out following other ISPs' criteria, not just BT's."
No. They would roll out - or not - according to their own criteria and their own financing. Their own financing would probably be a lot less than as part of the BT group, at least until some other company such as Deutsche Telekom* bought them out when you'd have a whole new set of problems to grouse about. And a separated Openreach would have similar requirements on ROI and prioritising one potential site against another.
*DT already own a slice of BT so would automatically own the same percentage of a split-off Openreach.
"They can roll out following other ISPs' criteria, not just BT's."
That will be fine if the "other ISPs" are prepared to pay for the investment.
This is the nub of the whole argument. All the non-BT players in the market want to have access to wholesale network capacity when they want it without having to pony up the investment in the first place. Unused capacity goes on BT's books. Everyone wants a fibre to their village and only pay the same rates as high density customers in bigger towns.
Once Openreach is separated from BT, it will still have to find its investment. If you don't force BT to continue as the cash cow, who will provide the money?
Spot one - too many halfwits think that having Openreach as an independent body will suddenly mean it will fibre the entire country and defy the laws of economics and put in £100,000 of cables, dig up miles of roads to serve a dozen homes who only want to pay £7 a month for it.
On its own, Openreach will have even less financial clout and won't be able to borrow much to invest because it will be seen as being easily dominated by Ofcom.
"On its own, Openreach will have even less financial clout and won't be able to borrow much to invest because it will be seen as being easily dominated by Ofcom."
The funny thing about all these nay sayers is that they seem resolutely blind to the fact that this event has already happened - in a country which has 1/10 the population density of the UK (even in rural areas) and a LOT more rugged terrain.
The experience of Chorus shows that an independent Openreach unconstrained by the handbrakes of BT head office is no longer prohibited from going out and hunting down customers - and it will do so.
BT's REAL fear is that losing control of Openreach leaves them incredibly vulnerable and subject to market competition forces - which they're simply not equipped to handle even after 30 odd years of privatisation.
how can it be that I live 10 mins from Junc 8/9 of the M4 yet BT cannot provide me a regular broadband service
Hard to say. Looking at the map it doesn't seem all that rural but complications can arise from many causes. The issues are not just in rural areas. Ask the people living near Canary Wharf who struggle to get decent broadband. Have you tried contacting an independent CP? There's a fair of these 'altnets' around and if they haven't been making any overtures to you then your area must be particularly difficult to cater for.
The trap to avoid is 'blaming' BT or seeing them as the enemy. BT would like to provide you with a better service but for some reason cannot do so. Most likely it comes down to money. For some reason they don't think the investment is going to yield an adequate return.
And of course the fact that the M4 is relatively nearby isn't really relevant. Data doesn't travel along the roads so there is no particular reason to mention it.
"Have you tried contacting an independent CP? There's a fair of these 'altnets' around and if they haven't been making any overtures to you then your area must be particularly difficult to cater for."
Or they've gotten tired of almost making sales and having BT say "thanks for the marketing", announce that they can supply BB after all, then sending in teams of doorstoppers to sign up customers to broadband contracts when it may be 2 years before they can actually supply it.
Yes, I've seen this happen and yes, I've seen the altnets driven out of business as a result.
"Data doesn't travel along the roads so there is no particular reason to mention it."
Many, if not all motorways do have data running along them. That's how smart motorways and the big matrix signs and CCTV cameras work. It's what is in that purple flexi-pipe you might have seen running along bridges etc.
I've no idea if that is an entirely private network or if it's shared backbone or something else. But if government is genuine about building out fibre then maybe the various departments need to talk to each other about what resources they have in place and how it might be shared, either the capacity or just the space for others to run fibre.
Oh, are we playing Top Trumps?
2miles from exchange as the crow files, but end of the line as it runs
Suburbia of a digital city
Openreach cabled up to cabinets on the same road 300m away in both directions, but didn't join up the dots
No Virgin fibre to my house
Listed building so no satellite
1Mbps on a good day
Do I win a prize?
We live 11 km from the exchange and BT will not lay the infrastructure to provide broadband to my community as we're a small hamlet and are clearly not economically viable for them to do so.
Presumably you live there from choice, so you've made the tradeoff. I also live in a rural area with slow broadband, but I'm not willing to put up with the inconvenience of living in a town just to get something faster, not do I expect the townies to pay for it for me. We don't have a regular bus service, or mains drainage either, but I still consider the tradeoff worthwhile.
If enough people in your hamlet want broadband aren't there self-help schemes that you could try?
"I know plenty of people who live in towns and can't get fast broadband."
Quite common in areas where fast broadband sales would cannabilise leased line sales.
This is the kind of market abuse BT regularly engages in - and which an independent openreach can't, because they get the same income from a leased line as a voice line as a broadband line.
This is the kind of market abuse BT regularly engages in - and which an independent openreach can't, because they get the same income from a leased line as a voice line as a broadband line.
Is protecting the sales of one product range from being cannibalised by another market abuse? because BT aren't the only company guilty of this...
I also see no reason why any company would charge the same for broadband as a leased line - they are very different products - and place differing demands on the infrastructure.
I think many have been hoodwinked and simply parrot that BT=Bad without pausing to engage brain...
At bloody last.
Well, on the one hand be grateful that they've finally decided, but then be fearful that it is Ofcom, so the chances of this being botched or not even happening must be quite high.
BT will go all the way to the Supreme Court to try and block this, so it isn't a done deal by any stretch of the imagination. And if new primary legislation is needed, that'll take years, given the other priority projects that the government have (Snooper's Charter, internet filtering, and all the rest of their genius ideas).
... when Ofcom forces through full and complete separation, will Ofcom also move to prevent the then independent Openreach being taken over (hostile or friendly - doesn't matter.) Will there be howls of outrage as it's bought by a sovereign wealth fund? China? Saudia Arabia?
10 years from now, when Openreach is owned by Sky, what will the solution be?
Reads more and more like a policy that plays into the hands of Rupert.
So anyone but BT owning Openreach will be corrupt and evil?
And what's to stop the Suadis or the Chinese buying both BT AND Openreach right now?
It's not a lack of money.
Do you even listen to yourself ever?
10 Year from Now when were living in your Marxist Utopia, I'll expect a knock at my door after you've gone through the snoopers charter to find and silence those who disagree with you. Viva le Revolution
Glory to the people, comrade.
@William 3
And if you'd slow down before firing from the hip and reread my original post,
I did not suggest that anyone but BT would be evil. I did not suggest that Openreach should remain in the ownership of BT.
What I did question was whether or not it was appropriate for such a key element of national infrastructure to be in the hands of foreign ownership. Some people might feel concerned at that. The two sovereign wealth funds that I selected were picked because they easily have the ability to foot the bill and neither is held up as a paragon of civil or human rights.
As to ownership by Rupert - if that doesn't fill people with dread, well -->
Ultimately, my post questions whether or not the regulator will take a broader view.
"10 Year from Now when were living in your Marxist Utopia, I'll expect a knock at my door after you've gone through the snoopers charter to find and silence those who disagree with you. Viva le Revolution"
10'o clock in the morning and how many of these have you had already?
"I assume...they can also step into prevent it being bought by another company."
They didn't step in to stop, say O2 being bought by Telefónica or the various other mobile networks being bought by foreign overseas companies. Back in the days of the golden share HMG could have prevented it but those days are long gone. And remember Deutsche Telekom already owns 12% of BT as a consequence of the EE deal.
The argument about keeping BT ('British Telecom') British and worrying regarding a foreign investor is pretty pointless, there is nothing British about BT. Nearly all of its recent installations is made by Chinese built Huawei. It looks after itself. BT are just worried of being put in a weaker position, with less overall control. Again, BT looks after itself.
What people forget here is BT will be one of those other ISPs fighting to make sure an independent Openreach works for an independent and separate BT too, post Split. It's in BT's interests to make sure a post Split Openreach system 'Works'.
Why keep the status quo. BT certainly doesn't have UK Plc as its main focus, and neither should it, but Politicians still seem to think and talk of BT in previous times, "Oh BT will do the right thing". Er - no they won't.
There seems to be a longing for nostalgia given how complicated things have got. In reality, the hard message to swalllow here is BT should have been split from Openreach many Moons ago. Ofcom's approach of toe-tipping, has been ineffective and useless upto now.
"will Ofcom also move to prevent the then independent Openreach being taken over"
This has already been thought through.
Selling lines services should remain a highly regulated service (in particular the charges and ensuring that all comers get equal treatment.
Rules should be put in place to ensure that no entity can hold more than 5% of the shares
New Zealand's original privatisation of their telco was a postr child for how NOT to do it. The rules and laws put in place to prevent the broken up telcos (baby bell style) from recombining were inadequately thought out (The first step - moving to being state owned enterprises resulted in companies that played nice) and naively trusted that the newly privatised SoEs would continue playing nice.
That lesson was very thoroughly learned over the ensuing 25 years and the structure placed on Chorus (NZ's equivalent to Openreach) is extremely well thought out to prevent any repeats of "rapacious telco holds the country to ransom".
British regulators should look long and hard at what was done and why things were done that way - one of the driving reasons for splitting Spark/Chorus (which is what Telecom NZ was trying to sell the NZ govt on) was a study of the british market and the realisation of how easily British Telecom was able to continue its economy-damaging(*) anticompetitive practices despite the supposed "chinese wall" between the devisions.
(*) As in, "acting as a a damaging agent to the UK economy" - with estimates of the damage running into billions of pounds per year in order to increase BT profits slightly and keep the market captive.
"All the costs of privatisation, but none of the benefits? Tell Sid."
Wrong advertising. Sid was gas. And would want to be in the queue for your rationed black telephone?
BT was privatised because no government of any stripe had been prepared to put sufficient investment into BT for years, had no intention of doing so for more years and saw a chance of getting money back instead.
>BT was privatised because no government...
The Germans weren't that stupid to fully privatise Deutsch Telekom, they still own 30%. The UK Government (The Taxpayer) own nothing and is left holding the pensions liability baby:
https://www.ft.com/content/59b0da16-347a-11e6-bda0-04585c31b153
https://www.devere-group.com/news/deVere-Group-UK-government-BT-pensions.aspx
>And would want to be in the queue for your rationed black telephone
Get in the queue for your rationed BT broadband.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
