Measures to ensure new Openreach delivers
Ofcom yesterday announced how Openreach will be held to account, as it becomes legally separate from BT, to ensure it delivers for phone and broadband users.
- Progress towards network division becoming legally separate from BT
- Ofcom explains how new company will be measured and monitored
We expect the reformed Openreach to engage with industry to deliver widespread fibre networks, offering fast, reliable broadband. The new company should provide a good service to meet the needs of all the people and businesses who rely on its network, together with a step change in quality of service.
BT agreed in March 2017 to Ofcom’s requirements for the biggest ever reform of Openreach, its network division. The changes mean Openreach becoming a distinct company with its own staff, management and strategy, and a legal purpose to serve all its customers equally. 
Ofcom will closely monitor BT’s compliance with its new commitments, and how effectively Openreach serves the whole industry. We will measure how far Openreach is improving its network and helping to deliver better quality of service.
Should it become clear the new Openreach was not working, or BT was failing to comply with its commitments, Ofcom would revisit the model and consider new measures to address any concerns.
Progress so far
Since March, BT and Openreach have taken positive steps towards implementing the new commitments, which we welcome. Openreach has a new Chairman and Board, with the majority of members having no affiliation with BT Group.
Openreach has set up its own compliance committee, and is consulting publicly on a new process for engaging with telecoms companies on planned services and investments.
How Ofcom will measure results
Ofcom will examine whether all UK consumers and businesses using Openreach’s network are receiving decent speeds, and the right service to meet their needs. We will measure, and report on, Openreach’s contribution to growing fibre broadband networks, including ‘full-fibre’ lines which are currently available to only around 2% of UK premises.
We expect Openreach to be responsive to different models of investment proposed by its customers, including co-investment and risk sharing.
We also want to see a step change in telecoms quality of service. So we will report on Openreach’s repair and installation times, and whether engineers are turning up on time.
How Ofcom will monitor compliance
Ofcom is establishing a dedicated Openreach Monitoring Unit, to monitor whether the new arrangements are implemented successfully.
The unit will assess whether new governance rules are being observed, and whether Openreach is acting more independently of BT, making its own decisions, and treating all its customers equally.
It will consider whether BT and Openreach are living by both the letter and the spirit of the commitments, and creating a successful culture that values Openreach’s independence.
Ofcom will publish its findings six months after the commitments come into effect, and then every year.
This will include BT’s delivery on commitments in Northern Ireland, where Openreach does not operate. A new protocol will govern the relationship between Northern Ireland Networks and BT Group, to ensure people and businesses in Northern Ireland benefit from the new arrangements in the same way as the rest of the UK.
Sharon White, Ofcom Chief Executive, said: “The new Openreach will be built to serve all its customers equally, acting independently and taking investment decisions on behalf of all its customers.
“BT has made positive progress towards implementing the reforms. Once they are complete, Ofcom will keep a careful eye on whether Openreach is working for telecoms users, ensuring BT and Openreach live by the letter and spirit of their commitments. If we see problems emerging, we won’t hesitate to act.”
Completing reform of Openreach is dependent on the Government amending the Crown Guarantee, which underwrites the BT Pension Scheme, so that it maintains pensions protection for members of the scheme who transfer to the new Openreach. The Digital Economy Act introduced a power to enable this change, and the Government is drafting secondary legislation to implement it.
After that, BT’s pension trustees would need formally to agree that Openreach will become a participating employer in the pension scheme. BT must also complete a consultation process for the transfer of employees to the new Openreach.
Once these are achieved and the new commitments come into effect, Ofcom yesterday confirmed that it will release BT from its past ‘undertakings’.
Notes To Editors
- The reforms are designed to address Ofcom’s concerns that BT has previously retained control of Openreach’s decisions, while other telecoms companies that rely on its network have not been consulted sufficiently on investment plans.
- By contrast, full-fibre broadband to the premise is available to around one fifth of homes in the US, and around three quarters of homes in Spain and Portugal.
- For example, Northern Ireland Networks will become virtually separate from BT. Under the protocol there will be equal treatment of its customers, including around confidential information, and BT branding will be removed from Northern Ireland vans and engineers’ workwear.
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