BT Openreach divorce must move faster, says Matt Hancock

The government is increasingly concerned that BT is not moving quickly enough to implement the structural split between the wider group and its network infrastructure arm, Openreach, and will consider taking action if things don’t change soon.

In a speech at the annual conference of the Broadband Stakeholder Group (BSG), the TechUK-backed broadband sector trade association, digital minister Matt Hancock threatened to get the regulator involved again.

“I am concerned at the speed BT Group are moving in formally implementing the agreed split,” he said. “Unless we make significant progress very soon, we will have to talk to Ofcom about what would be needed to make this happen.”

Hancock did, however, welcome some of the progress that has been made since the terms of the divorce were agreed in March 2017. The split is designed to give Openreach more independence in terms of its investment decisions and make it easier for BT’s competitors to compete with it in the provision of broadband services.

“I can already see the new independent board under the astute chairmanship of Mike McTigue making a difference,” he said. “The test of the success of the legal separation will be twofold. First, significantly increased investment by BT Group, through Openreach, in the country’s full fibre digital infrastructure.

“And second, Openreach becoming more responsive to its industry customers, both by entering into new arrangements with customers other than BT Group, and being proactive and enthusiastic on working with others on the ground, for example opening up access to ducts and poles. Like Ofcom, we want Openreach to provide better access to data on its duct and poles so competitors can plan new networks.”

Openreach’s director of corporate affairs, Catherine Colloms, responded by saying Openreach was tracking ahead of the schedule laid down for its separation from BT by Ofcom. She cited a number of metrics as evidence of this, including the establishment of an independent board and its recent rebranding.

“On 99% of what we’ve been asked to do under the DCR [Digital Communications Review], we are on or ahead of schedule,” said Colloms. “There is one issue, which is a big knotty issue, which is around pensions.

“The transfer of 32,000 people into Openreach requires a Crown Guarantee and there is complexity around how you make that work for the pension guarantor and for the BT Group.”

Colloms said that in spite of this, Openreach was well on track to incorporate as a limited company by Christmas 2017.

Just over a year has passed since Hancock flipped government broadband policy firmly in favour of a fibre-to-the-premises (FTTP) service delivery mechanism, and the minister also used his speech to reflect on the progress made since then.

This includes the launch of the Digital Infrastructure Fund to encourage altnet investment in FTTP, release of the first tranche of funding from a £200m funding pot to develop local full fibre networks, and ongoing work with Network Rail to unlock its trackside fibre network.

Hancock also said work was progressing on the development of a competitive process for local areas to bid for resources from a fund to support the stimulation of large-scale commercial broadband investment. More details on this would be announced soon, he said.

 “We all want people to stop badgering us about their broadband. And I want to ensure they don’t have to badger us ever again,” he added. ………………………………………………………………………………………………………………………

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