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BT Group Complete Transfer of 31000 UK Employees to Openreach

Monday, October 1st, 2018 (12:01 am) - Score 3,477

BT has today announced that 31,000 of their employees have officially been transferred (TUPE process) to become part of an “independent workforce” under Openreach, which is a key part of Ofcom’s requirement that the network operator become a “legally separate” company (a wholly owned subsidiary of BT plc).

On top of that it’s also been announced that BT’s Northern Ireland Networks engineering division is to be rebranded ‘Openreach Northern Ireland‘. The Northern Ireland Networks team will thus report into Openreach, albeit retaining their local management team and organisational structure.

Both developments stem from Ofcom’s 2016 Strategic Review (full summary), which ruled that Openreach still had an “incentive to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems” and that they had failed to “sufficiently” consult rival ISPs (i.e. those using their network) on future “investment plans that affect them.” They were also deemed to have under-invested in their network.

In response BT and Ofcom reached a voluntary agreement (here), which aimed to boost competition by giving rivals easier access to the operator’s infrastructure and fostering an independent governance structure for Openreach, as well as tougher minimum service quality standards, separate branding, new consumer protection measures and better information sharing etc.

Back in June 2018 the regulator reported that Openreach was making “satisfactory” progress with their efforts to become a distinct company away from BT (here). However they also called for “bolder” commitments for the rollout of FTTP based “ultrafast broadband” connectivity and highlighted problems with implementing the aforementioned TUPE transfer of employees, as well as some changes in N.Ireland. But progress has been made.

Mike McTighe, Openreach Chairman, said:

“This is an important day for Openreach as we’re fulfilling the commitments to Ofcom under the Digital Communications Review.

Openreach now has its own Board, greater strategic and operational independence, a separate brand and an independent workforce – and we’re ambitious for the future.

We’ve set out a clear plan to invest in new, more reliable, future-proof broadband technology, and we’re right in the middle of our largest ever recruitment drive for 3,500 engineers – so it’s an exciting time to be part of Openreach Limited.

We’re determined to continue improving customer service, collaborating closely with our customers, and spearheading the national rollout of next generation broadband networks.”

As it stands Openreach intends to make their Gigabit capable FTTP broadband network available to 3 million UK premises by the end of 2020 and they have an ambition to reach 10 million by around 2025, although we’re still waiting for that ambition to be confirmed as a reality (all the signs say it will be but negotiation is on-going).

The legally separate operator can now boast of having the “largest team of fibre broadband engineers in the country,” although strictly speaking they had that before today too. Meanwhile they’re aiming to boost the uptake of their fibre based services via new discounts (here), which could free up more public reinvestment under the Broadband Delivery UK programme in order to help further improve superfast broadband coverage.

As of March 2018, BT has made provision for £528m to be returned over the lifetime of the BDUK contracts (stems from clawback in the contracts and related high take-up) and £80m of this has already been committed – earlier than required (many contracts run for 7 years) – to improve speeds and coverage in certain areas.

UPDATE 11am

As a result of today’s update Ofcom has said they are “now in a position to implement our July 2017 decision to release BT from the 2005 Undertakings … We will provide a further update on 31 October 2018 when we intend to issue the formal notice of release of the 2005 Undertakings.” This is essentially the formal process of swapping them from the old model of regulatory framework and moving them to the new one.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
13 Responses
  1. Dee Dee Slam says:

    All fur coat and no knickers, as my Nan used to say.

  2. Simon says:

    Yeah – as if they are going to do that and take that..

  3. Neb says:

    Another UK asset ready for purchase…

  4. A_Builder says:

    Or more hopefully a new dawn for a reinvigorated OR?

    The Alt Nets are doing great work at costs OR could only dream of a few years ago.

    But there is still a big place for OR if it can get it fibrous act together. Mass has a quality all of its own.

    Lets hope that OR can get agile with different solutions and stop blaming OFCOM for everything. Historically OFCOM and BT had a terrible relationship mostly because BT was digging its heels in so hard over investment and every time anything constructive was raised BT drowned it in excuses.

    Full fibre is now investable at the Alt Net costs.

    New structure and new faces can lead to a new start.

    Let’s hope so.

    1. Meadmodj says:

      “Full fibre is now investable at the Alt Net costs”. BT’s purchasing power, existing duct network, direct and sub-contracted resource arrangements should mean that OR are in the best position in urban and semi rural so what are the Altnets doing that OR aren’t?

    2. A_Builder says:

      @Meadmodj

      Very often the issue with large business is that it expects costs to be what they were last time: there is no going to a clean piece of paper or thinking “what makes sense” – “does this cost make sense in the real world”. Worse is the tender fallacy “I have tendered this to three companies therefore” we know the market price for this” – still needs to pass the common sense test.

      Sometimes being a bit cash starved helps a business think more creatively and come up with challenger business models. And that is how the Alt Nets pretty much all started out.

      OR’s costs should be lower.
      But I will bet
      – the supply costs for raw materials and subcontract are high because BT central insists on very long payment terms: these always get loaded back onto tender costs.
      – because BT is bureaucratic subcontracts see risks in not being able to get hold of the real decision maker or get a snappy decision: so that is loaded onto costs. As there is built in standing-idle-time.
      – there is an inbuilt assumption to OR’s costing model that things that things won’t be done very efficiently. This could be because the team on the ground are very good but run into an issue and cannot get a new instruction from management to allow them to complete the task then and there.

      Small agile companies that pay fast and have good subcontractor relationships can make much better margins than behemoths. In spite of the behemoth’s bigger spend….it is all down to focus.

      Going back to our debate on FTTPoD last week this is why is makes sense to have different cost centres so that efficiency can be viewed and held up as an exemplar.

    3. Joe says:

      @A_Builder: Unions are also an issue. Big unionised companies usually can’t just change things without a bucket load of hastle/timedelay. The alt nets have little of a workforce and contract out so can chop and change freely the way they do things..

    4. A_Builder says:

      @Joe

      “Unions are also an issue. Big unionised companies usually can’t just change things without a bucket load of hastle/timedelay”

      I know where you are coming from.

      However, fibre jobs are the jobs of the future. Copper jobs are going to be slowly diminishing. To a certain extent the workforce will vote with their feet by volunteering to retrain for the fibre jobs. And yes some of the older guys will want to stay with copper and there will be work for them for the foreseeable until all of the copper network is withdrawn – which will be a long time in coming.

      Being part of specialist elite teams, which is what FTTPoD should really be, is also a draw. Small groups of highly motivated people always delivery better efficiently over larger groupings. FTTPoD guys need to think on their feet.

      Nor is the unionisation going to affect the subcontracting and payments culture which is more at the root of the inability to control costs downwards.

      So yes I take the point but also it needs to be tempered with a focus on the good and positive things coming down the road for the workforce.

  5. Meadmodj says:

    Separate legal entities, TUPEing individuals and creating new management structures does little but increase costs. Hopefully it is allowing Openreach to review is central costs and overheads.
    What I am not convinced of is that this will actually result in what is required which is a higher levels of FTTP investment.

    1. Joe says:

      “What I am not convinced of is that this will actually result in what is required which is a higher levels of FTTP investment.”

      That wasn’t the reason behind the split

  6. sian says:

    yeah and still be run by cowboys as the networks is absolute rubbish

    1. Fastman says:

      sian or whatever you name is today as I dnot regnoside sian

      you building your own network then ?

    2. Fastman says:

      should be recognise

      trying to do more that one think as once

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