While your BT broadband is down… We need to talk about Openreach

Written as editor of the New Statesman’s NS Tech and first published here.

The only time anyone ever really notices the internet is when it’s not working.

BT suffered a major outage today, which obviously has customers (who need the web, always) up in arms with the nation’s biggest broadband provider.

BT outage at 1700

But there’s much more going on in the background with our friendly Internet Service Providers that few outside of the industry ever talk about, even though we all rely on them more than ever.

It’s 10 years since Ofcom and BT agreed to formally separate the telecoms provider’s retail arm from the pipes that connect homes and businesses into a new subsidiary, Openreach.

The purpose of creating a new and separate division was to “deliver Openreach products on an open and even handed basis to any and all communications providers”.

Competition, it was hoped, would ensure better internet at lower costs.

At the end of this month, though, another decision on the future of this relationship will be taken by Ofcom, as part of its strategic review of a decade of living with these awkward bed fellows.

Today, Openreach says it has installed and now maintains around 30 million telephone and broadband lines, attending a whopping 175,000 jobs each week, from problems at the telephone exchange to those at the green, on-street cabinet.

The likes of Virgin, Sky and hundreds more resellers depend on Openreach’s pipes to deliver their respective flavour of broadband direct to companies and homeowners.

But few believe it’s doing as well as it could be. The network simply “fell down during the floods” one industry watcher points out.

Yesterday, Openreach was roundly slated by a committee of MPsfor “significantly under investing” in the network.

The DCMS report explains:

“The Committee says BT has exploited its position to make strategic decisions that ‘favour the Group’s priorities and interests’ – and is likely to have sacrificed shareholder value and customer benefit as a result. Capital investment in Openreach has been broadly flat since 2009 until this year, and quality of service remains poor.”

In response to this, BT countered:

“We’re disappointed to be criticised, having invested more than £1 billion a year in infrastructure when the UK was emerging from recession and rival companies invested little. As the report acknowledges BT’s investment has made the UK a broadband leader among the major economies in Europe.

“Openreach investment is 30 percent higher than it was two years ago and it will grow again this year. We’re already pumping in hundreds of millions of pounds of extra money and we’ve committed to invest a further £6 billion over the next three years.

“We agree that service levels have to improve and yesterday we announced that we’re making significant progress in this area.”

On the question of further spinning out the operation, though, it added:

“We are in discussions with Ofcom about increasing the autonomy of Openreach and we’re hopeful that a settlement is possible that will meet the concerns of the committee.

“Separating Openreach from BT would lead to less investment, not more, and would fatally undermine the aims of the committee.”

On speaking to those in the industry, Openreach has been called a “glorious fudge” and has even been accused of “letting the country down”.

One reason is that it hasn’t quite separated as far from big BT as many competitors or wholesale buyers would like, with accusations made that profits are used to subsidise other parts of the larger company.

Another is that its ‘superfast fibre’ currently only means fibre connections as far as the street cabinet, with the connection into each premises still being delivered on a old-style copper network.

Not only does that mean a maximum of around 24Mb download speeds that can feasibly be squeezed from copper, but also that you’re competing with up to 20 different buildings for your share of… juice.

Many want Openreach to become more or even fully independent, with the Federation of Communication Services that represents wholesale suppliers like Virgin, calling for it to be made a not-for-profit.

“Openreach is not delivering what the marketplace of today needs and that’s partly because the same demand simply wasn’t there five years ago,” explains Chris Pateman, CEO of the Federation of Communication Services.

“From a business customer’s point of view, the business is not fit for purpose, but the majority have no alternative.

“What you want from a utility is access to good quality standards at reliable prices, so we think the intelligent thing to do would be to mutualise it, something like Welsh Water.”

Although Openreach is accused of having a stranglehold, that hasn’t completely squashed competition in the market, with big players like TalkTalk and smaller ones like Gigaclear, leapfrogging BT’s copper network with nifty newer technical fixes.

“Has the current separation worked from a competitive point of view? No,” says Matthew Hare, chief exec of Gigaclear. “Has Openreach been performing and investing at the right level? No.

“Now that the UK has voted to leave the EU, this offers Ofcom a moment of change to get a better deal out of Openreach to deliver better infrastructure.”

Hare isn’t certain a not-for-profit is the answer, not least because Openreach shareholders would be looking for adequate compensation, but agreed:

“In the short term, it would be better for us if BT had Openreach taken away.

“Long term, it might be worse for us as there’d be stronger competition for building alternative network infrastructure, but for the country, we definitely need a body that is more focused on building the best infrastructure.”

Openreach made a number of commitments to improving its service earlier this week, ahead of the select committee report, and ultimately the Ofcom review.

On top of those, it stated that:

“Openreach’s engineers fix 84 per cent of faults within two working days – compared to just 67 per cent when reporting began two years ago. The business installs 93 per cent of new lines on time, and it has cut the average time to get an appointment from 11 to seven days.

“Openreach has also reduced the number of appointments its engineers miss by more than a third in just three months and is on track to halve missed appointments this year.”

Openreach is certainly transparent, publishing a quarterly report on how it’s measuring up against its relevant KPIs.

Unfortunately, transparency isn’t the same as doing a ‘good’ job, particularly as so many now rely on the internet to get most of their life and work done.

Two days to fix your internet is probably too many, to most people.

Many Internet Service Providers are now waiting with baited breath to see if this is finally the end of the Openreach’s effective decade-long monopoly.

Most normal people will never know about the battle for better internet pipes. But the struggle is real.

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