AltNets Raise Concerns Over Openreach’s UK Exchange Closures

The Independent Networks Co-operative Association (INCA), which represents UK alternative full fibre and fixed wireless broadband ISP networks, has warned that Openreach’s (BT) plan to close 4,600 exchanges creates a huge and costly problem for many of their rivals in the alternative network space.

Network access provider Openreach currently has around 5,600 UK exchanges but only c.1,000 of these exchanges – the Openreach Handover Points (OHPs) – are used to provide nationwide coverage of modern “fibre broadband” based services (FTTC, FTTP and G.fast).

However, the rapidly increasing move toward fibre and IP-based phone connectivity has long been expected to result in the closure of many old exchanges, since fewer such hubs will be required to deliver the new services (i.e. as copper services are slowly withdrawn, then the number of exchanges shrinks). On top of that, it would quickly become economically unviable to support both the old and new exchanges together.

The catch is that many of those “old” exchanges don’t just supply antiquated copper-based telecoms services and are also used to support various other business services for ISPs and AltNets. For example, this may include high-capacity Ethernet (data) connections, co-location facilities, Physical Infrastructure Access (PIA) connectivity, Interexchange Dark Fibre (DFX) and more.

As if to make a bad situation worse, Openreach appears to be shifting the costly burden of rearranging all this on to rival operators, except in an “extremely limited” (INCA’s words) number of cases where the operator has specific contractual obligations to cover the costs. Rearranging all this for a few exchanges is one thing, but applying that to thousands creates a colossal burden for the industry.

Suffice to say, INCA considers Openreach’s position on such costs to be “inappropriate” and has called for transition pricing, while demanding that Openreach agree to “shoulder a portion of the costs to its customers of accommodating the planned exchange closures“.

In its response to the incumbent’s consultation, which has now been shared with ISPreview.co.uk, INCA also calls on Ofcom to take a greater role, since the closures will directly impact the continuity of supply for various regulated products (e.g. DFX is fairly recent and some AltNets use it for backhaul). The group also calls on Openreach to conduct a full impact assessment in order to fully illuminate the challenge.

Malcolm Corbett, CEO of INCA, told ISPreview.co.uk:

“It is clear that the exchange closure project will be lengthy, complex and have significant ramifications across the market. Whilst we welcome Openreach’s initial industry engagement on its plans, INCA believes that Ofcom needs to play a central role to oversee the framework of this consultation, to ensure that all relevant issues are covered and are subject to full and transparent investigation.

INCA believes that a systematic and comprehensive impact assessment is urgently required and stands ready to engage and input into its development.”

Openreach has already acknowledged the complexity of all this, which is why they recently scaled-back their initial pilot (here) to focus on just 5 of the affected exchanges instead of 100. The pilots are due to begin in April 2022, with final withdrawal expected to follow between December 2023 (Deddington) and June 2024 (Carrickfergus, Ballyclare, Glengormley – all in County Antrim – and Kenton Road in London).

In addition, Openreach has stressed that they fully intend to comply with all of their obligations under PIA.

A Spokesperson for Openreach told ISPreview.co.uk:

“We’re due to formally notify our customers and the wider industry (this week) with timings for when pilot closures will happen and what this process will involve. This will be followed by a detailed industry response to the consultation we launched last year, which will provide answers to many of the points that INCA and others have raised.

This is a complex, long term issue with implications for the whole industry, so we won’t be responding in a piecemeal way to individual submissions and opinions via the media.

We have already met with representatives of INCA and many other industry stakeholders, and we want to continue working closely with those impacted to help determine our strategy and plans.”

We should point out that communications providers will still be able to get some of the aforementioned products from the remaining OHPs (e.g. Ethernet Access Direct), but doing so could significantly add to their costs (e.g. the link distances will be much longer with fewer ‘local’ exchanges). Altnets also suspect that Openreach may not feel terribly incentivised to find a solution for all the issues.

“Openreach has explained that it is working on new products and pricing and that it wants to develop solutions that meet needs of their customers. Given, however, that Openreach is in many instances a reluctant supplier of the relevant services, it is not clear to INCA that Openreach’s incentives are that closely aligned with those of its customers,” said INCA’s consultation response.

Alternative networks often point out that building new infrastructure, such as for gigabit-capable broadband, requires long-term planning and investment decisions. But they note that “significant changes can result in investments becoming unviable. Stability, visibility, and planning are essential and come part and parcel with Openreach being the provider of critical building blocks for the future fibre broadband infrastructure,” added INCA.

UPDATE 4:16pm

Just to clarify one small point. Openreach still aims to close 100 of the old exchanges by 2030 as previously planned (the rest will follow, gradually, after 2030), but they’ll trial this with just 5 exchanges first.