UPDATE2 Ofcom UK Find BT in Breach of its 2005 Regulatory Undertakings

Ofcom has warned that a delay with moving Customer Side Records (CSR) to separated computer systems means that BT is now in breach of its 2005 Undertakings, which committed the operator to a “functional separation” of systems and processes to support the development of “effective competition” in the UK telecoms market.

The Undertakings included several milestones to be achieved by 31st December 2012 and one of those (section 5.44.2(c)(ii)) required BT to ensure that at least 90% of their Customer Side Records, relating to the Measured Products held on Operational Support Systems shared between Openreach and the rest of BT, were separated (Level 2 System Separation).

A Level 2 System Separation means separation of the data held by the system and separate instances of the application software, which is designed to prevent users from having access to information that could provide for an unfair advantage.

However BTOpenreach advised Ofcom in November last year that it would “not be in a position” to meet the agreed end-of-2012 CSR deadline and reaffirmed that it was still “fully committed to achieving the target“, which has been given “top priority“, by setting a new date sometime in Autumn 2013. Never the less Ofcom stuck to its rules and opened an own-initiative investigation at the start of this year, which has now concluded that BT is in breach.

Ofcom Statement on BT’s CSR Deadline

“Ofcom has considered BT’s representations and is satisfied that BT is in breach of section 5.44.2(c)(ii) of the Undertakings. Therefore, on 14 March 2013 Ofcom gave BT a direction specifying steps to be taken for the purpose of securing compliance with that section. BT has until 28 March 2013 to give written notice to Ofcom as to whether it accepts or declines to accept the direction. The direction only takes effect if BT accepts, or is deemed to have accepted, the direction.”

According to the CEO of BT’s technology division, Clive Selley, “The scale of the task to date has been enormous … data separation of 30 years of legacy IT applications has proven extremely challenging, with many complex issues requiring resolution emerging only as our teams work through the programme.”

Selley further claims that at one time over 1,000 people were working on the separation process, although it’s unclear how many of those are still active today. “This is of course the first project of such scale of its kind in the world where there will always be an element of the unknown,” added Selley.

It’s worth pointing out that BT claims to employ “robust user systems access controls“, which are subject to regular audit and designed to prevent unfair access or use of the relevant Openreach information. Similarly BT has achieved some of its other Undertakings ahead of schedule.

The telecoms regulator considers any breach of BT’s Undertakings to be series matter and one that could potentially result in enforcement action, although we’d be surprised if that happened as Openreach has already made clear when it hopes to achieve the target. BT now has until 28th March 2013 to agree a solution based on Ofcom’s direction.

UPDATE 8:57am

A spokeswoman for Openreach told ISPreview.co.uk this morning, “BT is considering the formal Direction that Ofcom has sent, and we will be replying by the due date. The full details of the Direction will be made public in due course, assuming that BT does indeed accept it, and we will be able to comment about the contents of the Direction at that stage. BT remains fully committed to the systems separation goals described in the Undertakings.‬‪”

UPDATE 5th April 2013

Ofcom has just issued a new Direction that requires BT to achieve at least 90% CSR separation by 30th November 2013, which appears to match BT’s best estimate.