back to article Openreach to split from BT... so they'll be 'Legally Separate'

UK comms regulator Ofcom has said today Openreach must become a "legally" separate company from BT – with its own independent board – under plans to reform the former state monopoly's infrastructure division. In February, Ofcom identified serious failings with BT's ownership model of Openreach. However, it stopped short of …

  1. Arthur the cat Silver badge

    Conscious uncoupling

    Expect Gwyneth Paltrow as a BT advisor in the future. I'm sure algae smoothies will help FTTP roll out.

    1. leexgx

      i see more price increases coming soon then

      all this will do is make more price increases

  2. paulf Silver badge
    Thumb Up

    BT only have themselves to blame

    We're only at this point because of BT's behaviour over the last 10 years, since Openreach was created as a "separate" division. As a structurally and legally separate entity Openreach's ACTUAL revenues, costs and profits can be subjected to proper scrutiny (rather than the figures management wanted to give) which should mean less gouging in the future not to mention questions about how much gouging went on in the last 10 years.

    BT wouldn't be here if it hadn't taken the piss for the last 10 years and it would have been able to continue milking Openreach more than it will be able to as a separate arms length subsidiary. If they'd invested properly in last mile broadband speeds, FTTC/FTTP, attended to installations/faults/tickets equally between BT Retail and non-BT Retail customers, and not milked Openreach until the pips squeaked to cross subsidise their TV and competition crushing ambitions they'd have kept the status quo so they only have themselves to blame. As I've said before "Full Structural separation" didn't have to mean "BT must sell off Openreach" but that will be significantly easier once Openreach Ltd is created as a legally separate entity.

    Oddly OFCOM have probably gone with the best option - get most of the benefits of Openreach being completely separate from BT Group without the lengthy and costly legal battle that would have come with a forced sale.

    1. Alan Brown Silver badge

      Re: BT only have themselves to blame

      "We're only at this point because of BT's behaviour over the last 10 years, since Openreach was created as a "separate" division"

      Telecom New Zealand did the same thing and attempted to sell it to the NZ govt. After studying the market abuse going on in the UK, the _commerce_ ministry rejected it and specified full separation (not the telcomms regulator, they were as lily-livered as Ofcom).

      It was achieved by making any further broadband funding contingent on company separation.

      The competition and market authority needs to step in here and make their presence felt.

    2. John Smith 3862

      Re: BT only have themselves to blame

      Maybe, but I wouldn't be surprised if we find ourselves still largely in the same place (well behind the rest of the OECD in fibre deployment) in 10 years time, and finally deciding that Openreach must be fully separated. It'll be 20 years too late.

      On top of the recent re-creation of BTEEhemoth, combined with the denial of the Three/O2 merger, Ofcom really does look like a bad case of regulatory capture.

      The BT beast has been the dog in the manger for far too long.

  3. JakeMS
    Stop

    When all said and done..

    Will any of these changes actually make a difference to the quality of the service Openreach provide?

    By which I mean when they say their going to send an engineer out and the engineer doesn't show up, when it takes them over a month to get a house hooked up with a phone line (Happened to me) and generally improve the speeds of broadband where they offer 80Mbps Unlimited?

    For example where they give you 80Mbps for a week but then slowly slow you down to 55Mbps?

    Or will it just end up being the same old service?

    I'm betting it'll stay as the same old service...

    1. just another employee

      Re: When all said and done..

      I will swap you my 2.8Mbs for your 55Mbs.

      We pay the same ....

      1. JakeMS

        Re: When all said and done..

        Been there, done that. Up until January this year I was stuck on 8Mbps, then I had no phone line for just over a month (as in no dial tone at all) and then in March I finally got my phone line and broadband back and had fibre at last!

      2. BongoJoe

        Re: When all said and done..

        I will swap you my 2.8Mbs for your 55Mbs.

        We pay the same ....

        I will swap you my 1.2 Mb/s for your 2.8Mb/s

        And I seem to pay a surcharge because of some small print saying because I live in an area where I don't need to lock my doors etc..

    2. Version 1.0 Silver badge

      Re: When all said and done..

      > I'm betting it'll stay as the same old service...

      Probably so but with a shiny new set of managers - of course their pay will need to be competitive with industry norms and given the fluid situation of the new company organization, a decent severance package will be required to compete for the best managers.

      So there won't be a lot of money left over for performance improvements - and anyway a "study" will be needed first ... more jobs for their chums.

  4. Doctor Syntax Silver badge

    So BT, via OpenReach, will end up subsidising Sky & TalkTalk who want to avoid making their own investment. Inevitably this will result in more cherry-picking at the expense of universal service provision as happened during the years that BT was prevented from rolling our fibre at all. Or am I reading this wrong?

    1. paulf Silver badge
      Pirate

      Lets not forget that BT was handed a substantial and important national asset, arguably, on the cheap so "subsidy" rubs both ways especially when you consider much of the same last mile copper (not to mention that bloody Aluminium!) is in the ground now as it was back in November 1984.

      The "Why should be subsidise our investment shy competitors?" also rubs both ways. If they wanted to play that card they'd have wired up the country with fibre for their own customers and left their competitors to the regulated copper network running ADSL.

      Cherry picking universal service again rubs both ways - BT are quite happy rolling out FTTC in areas where it's easy and profitable, leaving rural areas on 2MBps ADSL (if they're lucky) while happily sucking up the HMG rural broadband subsidies. Should a community have the temerity to do it themselves and set up their own operation to provide decent broadband in their BT-neglected area, BT suddenly realise their cabinets (with no FTTC date) are suddenly worth provisioning with FTTC blowing the local DIY job business case out of the water and eliminating a competitor in one go.

      I don't have any time for Sky or TalkTalk but don't play BT as the lowly victim here!

      1. Alan Brown Silver badge

        "while happily sucking up the HMG rural broadband subsidies."

        And pissing them against a wall with no proof of where they're actually being spent.

        This is WHY the New Zealand government made full operational/commercial separation a requirement of any continued funding.

        The fact that it meant the telco had a free choice of accepting the money or not breaking itself up and that avoided costly and time-consuming court action. The UK government should take the same path.

    2. Danny 14

      Not really. Openreach will need to liaise with bigger operators when rolling out improvements. That means sky and talk talk can also put into investment areas and not be cream crackered by last mile excess charges.

    3. Alan Brown Silver badge

      "So BT, via OpenReach, will end up subsidising Sky & TalkTalk who want to avoid making their own investment. "

      In one word: Bullshit.

      Proof: Telecom NZ -> Chorus/Spark

      It's funny how the shills come out to play every time Openreach makes a determination against BT.

      It will be interesting to see if the "full separation" allows the _real_ amounts that BT is making out of Openreach to become visible or if creative accounting will continue to be used to hide it.

  5. Tom 7 Silver badge

    FTTP

    Fin Takin The Piss.

    1. Anonymous Coward
      Anonymous Coward

      Re: FTTP

      I though so too, but Openreach works in mysterious ways. Living in a rural area I've always accepted that decent broadband speeds were never going to happen. Then last month the telegraph poles in my area were fitted with blown fiber ducting with FTTP manifolds on top. This is despite them supporting no more than 4 houses each. Even if we all go for 330Mb/s Infinity 4 I can't see how this will ever be cost effective for Openreach. I'm not complaining .... just pleasantly surprised.

      1. Patrician

        Re: FTTP

        You haven't got FTTP installed yet, it could take ten more years before you do.

      2. Alan Brown Silver badge

        Re: FTTP

        "Then last month the telegraph poles in my area were fitted with blown fiber ducting with FTTP manifolds on top."

        Fibre isn't susceptable to lightning strikes. Long copper lines are.

        1. leexgx

          Re: FTTP

          Alan Brown

          LOL you do understand what blowing fiber down the ducts mean ?

          he not saying the the fiber has been burnt out :)

          1. Alan Brown Silver badge

            Re: FTTP

            "LOL you do understand what blowing fiber down the ducts mean ?"

            Perfectly. I've even done it in a past life as a telco goon.

            "he not saying the the fiber has been burnt out"

            Nor am I. I'm saying that long copper lines are at risk of lightning strike and end up expensive to repair, so replacement runs are usually done as fibre overlays.

            The question of whether that fibre gets to premises along the route is another matter for the reader to discuss.

      3. Anonymous Coward
        Anonymous Coward

        Re: FTTP

        > "Living in a rural area I've always accepted that decent broadband speeds were never going to happen. Then last month the telegraph poles in my area were fitted with blown fiber ducting with FTTP manifolds on top."

        I spent a some time on a farm in the West Country recently. They had creaky, very slow ADSL, but were being upgraded to fibre. According to the Open Reach guys (I was chatting to them as they'd shut the road and I couldn't go anywhere...), one of the execs of a telco lived nearby and had their home's connection (and just their home's connection) upgraded to fibre ... those living in the area all complained about not being able to get a reasonable connection, and after something of an outcry, they were upgraded too.

  6. HmmmYes

    Talking to the OPenReach guy who visited work, the org seems a bit of a mess.

    I was allowing for some of the usual griping but BT appear to have a major fckup on their hands.

  7. This post has been deleted by its author

  8. Roger Kynaston Bronze badge

    Full separation

    Does that mean Openreach would be publicly traded? What would be the outcome if some other provider (Verizon or such like) decides to bid for it? Is that a a possibility? I don't live in the States but I gather that they are not very popular over that side of the pond.

    1. Anonymous Coward
      Anonymous Coward

      Does that mean Openreach would be publicly traded?

      No, they will be 100% owned by BT and will pay dividends to them.

    2. paulf Silver badge
      Facepalm

      Re: Full separation

      Again: "Full Structural separation" != "BT must sell off Openreach" as described here

      It was always possible that another entity could bid for some or all of BT Group although BT's determination thus far to hold on to Openreach would probably thwart any such bid for it unless shareholders pressured the board to do a deal.

      Really, I doubt someone like Verizon (to use your example) would want Openreach, and even if they did Openreach is heavily regulated due to its near monopoly position. It would be more appealing to Infrastructure investment funds who typically invest in things like water and electricity distribution companies as they seek relatively stable income based returns.

  9. SVV Silver badge

    What a joke

    does this mean that we now have to pay 17 quid a month "line rental" to Openreach instead of BT, ragardless of which ISP we use?

    In other words, we're swapping one monopoly for another - Hurrah! Well done regulators you've made things so much, erm, exactly the same as they were before.

    How about if a month's internet access costs £30 in total you have to advertise it as costing £30 instead of all this small print, over complex, monopolistic pretence of a free competetive market?

    1. SImon Hobson Silver badge

      Re: What a joke

      > does this mean that we now have to pay 17 quid a month "line rental" to Openreach instead of BT, ragardless of which ISP we use?

      No, it means that whatever service provider you use will still pay OpenRetch as they do now. The difference is that at the moment, BT and BTOR are not separate - so BT can make a real buffet out of the books and hide real figures.

      As above, the allegation is that BT sucks money out of OR, thus making OR look unprofitable and just justifying what it charges. In principle, when this legal separation is complete then it will be visible where the money comes in and goes out.

      But the thing is, providing the wires to your home is a natural monopoly - and that's not going to change. You'll find plenty of providers who will sell you a "complete package" for an inclusive monthly fee - but also you are free to get your phone service from one provider, your broadband from another, ...

      What hopefully will change is the end of the preferential treatment that BT group companies allegedly get from OR. What is supposed to happen is that (for example) BT (for the phone) and BT Internet (for the broadband) both get the same access and service from OR that all other providers do, no more and no less - yes, and I'm watching the porcine aerobatics team practicing outside my window right now !

    2. paulf Silver badge
      Facepalm

      Re: What a joke

      Nothing like that was mentioned in the article. Openreach don't run a retail operation and never have. You will pay line rental to your retail provider (BT/Sky/TalkTalk/whoever) as you do now which Openreach provide to them at wholesale rates. They even show you the prices on their website (GIYF) as they're regulated by OFCOM!

      Current wholesale rate for a line is £86.72/year (£7.23/month). Anything above that is added by your retail provider for CS, billing, "free" calls etc. That's a gross retail margin of ~60% so there's plenty of scope for providers to compete on price if they want to but that will probably lead you to operators like TalkTalk who's cheapo approach to security has had rather a lot of coverage in this esteemed organ of late.

      If you've signed up for a Broadband provider that didn't make clear the additional line rental charge then the icon applies ->

    3. Alan Brown Silver badge

      Re: What a joke

      "does this mean that we now have to pay 17 quid a month "line rental" to Openreach instead of BT, ragardless of which ISP we use?"

      Your line rental component is likely to decrease substantially. The New Zealand example was that the charges more than halved.

      The reason is that BT is using Openreach to cross subsidise the rest of its operations, not the other way around.

    4. itzman

      Re: What a joke

      You dont have to pay £17 a month line rental

      Its only about £14 these days. Or a bit less if you pay for an annual contract

      http://www.idnet.net/voice_products/pstn_standard_phoneline.php

  10. Roland6 Silver badge

    Ofcom announcement and link to Consultation

    http://media.ofcom.org.uk/news/2016/making-digital-communications-work-openreach-bt/

    Memo to El Reg writers, if you make reference to a public consultation, include a link to the relevant webpage so people can more readily follow up...

  11. GettinSadda
    Devil

    BT Structure

    Is it just me that sees there being four parts to the BT Group?

    * BT Retail

    * BT Wholesale

    * BT Openreach

    * BT Ofcom

    1. paulf Silver badge
      Joke

      Re: BT Structure

      You forgot

      *BT EE (CEO Maureen "You got an ology, you're a scientist" Lipman)

  12. Mark 85 Silver badge

    New Directors?

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

    So they get to pick directors.... "Honest, he's my brother-in-law, but we don't talk to each other... honest, it's a family feud thing.".

  13. shamus21

    You have to question who’s side the regulator is on. This is just more gas bagging, nothing is going to change. 10 years from now we will still have the same situation we have now while the rest of the world will have moved on. This is not just about the home user wanting to what films from Amazon prime or netflix or do a bit of online shopping / Banking. It is about UK PLC it`s about doing Business in this country and across the world. While we are stuck with low investment and clapped out old copper lines the majority of our global competitors will have high speed fibre. Not to forget the bandwidth requirements going forward for 5G where copper will not come close to being up to the job and the Gfast tech is just BT leading the gullible politicians down the garden path with more B/S and trying to fleece the Taxpayer of more money.

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