Ofcom Cautions BT in New Report on Openreach’s Independence
Ofcom has published their annual 2023 monitoring report into Openreach’s independence from BT, which found that the commitments made by the operator “have generally proved to be successful“. But the regulator warns against complacency and cautions BT’s CEO, Philip Jansen, against repeating some of his recent remarks.
Just to recap. The annual report process was established some years ago as part of Ofcom’s effort to monitor Openreach’s progress toward becoming a distinct “legally separate” company away from BT, which in turn stemmed from the original 2016 Strategic Review of Digital Communications (full summary).
The aforementioned review found that Openreach previously had an “incentive to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems” and that the BT had failed to “sufficiently” consult rival ISPs, such as those that piggyback off their network, on future “investment plans that affect them.” They were also deemed to have under-invested in their network.
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In order to resolve that, BT and Ofcom reached a voluntary agreement in 2017 (here), which sought 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 (see today’s news), separate branding, new consumer protection measures and better information sharing etc.
The first few years after that agreement did have a few bumps, but these days Ofcom’s annual monitoring report tends to be fairly uneventful. “Our experience to date is that the Commitments have generally proved to be successful, and we continue to see evidence that they are well-established and well-embedded across BT and Openreach,” said Ofcom.
A BT Group spokesperson told ISPreview:
“We welcome Ofcom’s report finding that the Commitments are working well. We remain focussed on complying with both the spirit and letter of the Commitments, including Openreach’s greater independence.”
Ofcom goes on to note that, where breaches of the agreement have occurred (examples often occur around changes in staff and the introduction of new systems), they’ve been “relatively minor in nature and are occurring at a rate typical of recent years (less than 10 per annum).” Such issues tend to be “swiftly and appropriately addressed“, but the regulator does caution BT and Openreach not to become complacent.
In particular, Ofcom highlights how the comments of BT’s CEO, Philip Jansen, in February of this year – including being reported as saying Openreach’s FTTP broadband rollout would “end in tears” for rivals – “caused Ofcom and industry significant concern … we would be extremely concerned to see similar comments in future and will be keeping this under close review.” But BT has since argued that Jansen’s comments were taken out of context (here).
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The regulator added that – over the last monitoring period – they have also had to consider a range of concerns raised by industry, sometimes expressed as formal complaints. “While we have not found sufficient evidence to open any investigations so far in relation to these complaints, we will continue to take these concerns extremely seriously and we will not hesitate to prioritise enforcement action as necessary“, added Ofcom.
As part of that, the regulator said they would be “strengthening the OMU’s operation over the coming months so that it remains an objective, vigilant and transparent safeguard,” although they didn’t specific precisely what sort of changes this might involve.
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 X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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Disappointing that Ofcom want to stop Jansen from expressing his views on the consequences of OR FTTP roll out. The idea that people should be stopped from expressing an opinion the regulator doesn’t like is alarming – it’s not even as if Ofcom are any good at their own job. If altnet investors want to ignore Jansen and throw money at altnets, then it’s their choice, maybe they’re right and Jansen’s wrong.
But let’s not see a world where Ofcom’s thought police are trying to prevent people pointing out the consequences of poorly thought out government policies. if Ofcom want a “to do list”, then rather than censoring well informed comments, perhaps they could come here and ask people what they should be doing. I suspect there will be a long list of things they should or could be doing, and are not.
Well said that man
Silly comment, BT has an obligation to not weaponise Openreach into destroying the ability for competition to effectively compete (for as long as it has a market share that allows it to effectively suffocate competition should it want).
As such, the CEO saying “it will end in tears” means he’s thinking about breaching that obligation (to all competitors) and Ofcom as a regulator who also has fostering competition under their remit, need to take that seriously before he starts acting on it.
This whole arrangement has been a farce. Openreach Limited is a company which is still wholly owned by BT Group plc. And the network assets would still be owned by BT plc.
standard response i see
You paying the costs of full separation given the ridiculous manner in which the entity was privatised to begin with?
Well, the reasons for privatisation (across telecoms, water, gas, electricity) were partly a belief that public sector = bad, but also a substantive need to remove the huge modernisation investment needs and pension obligations out of the public accounts, since at that time government still had a pretence of understanding concepts like public sector debt, balanced budgets, balance of payments, money supply, retaining an investment grade rating and the like.
If it hadn’t been privatised, the billions invested by telecoms companies, water, gas, leccy would all have been part of the national debt. With hindsight it wouldn’t have mattered given the profligacy of both the last Labour government and the last 13 years of Tory mismanagement, and those whingeing for state ownership should consider (a) how crap most public sector utilities were, and (b) how Labour’s approach to public sector investment was to foist around £60bn of wildly expensive PFI deals onto the NHS.
There’s no party political opinion here, they’re all as crap as each other, but the point is that there was a rationale at the time of privatisation, and the alternative would unlikely have generated too much difference by way of outcome, other than that you’d be waiting on politicians to make all the choices as to who gets FTTP, if they’d even got that far in an alternate universe.
@Fastman: Do you have anything constructive to say here? Most users here agree that the current situation with Openreach is not sustainable. What’s needed here is a genuinely independent network infrastructure company.
It’s outrageous that ofcom allowed Openreach to remain solely to be owned by BT group. They should have given its rivals like Sky etc to buy a share of ownership. Ofcom in my opinion are clueless, the whole switch to full fibre has the makings of a total cockup.
Sky are owned by Comcast. Comcast make BT Group look like a small, regional provider. Comcast could buy BT Group, if allowed to, without blinking financially.
Sky do not need any help from the regulator.
What makes you think Sky would have been interested in investing? They’ve never really shown any interest before – they ran away from the York FTTP trial fairly early on, they’ve not even made the sort of commitment that Vodafone did with CityFibre to commit to a wholesale partnership.
Sky are far more comfortable having somebody else take on all the risk of building, and then having their executive team moan in the pages of The Times if they don’t like the wholesale options available to them.
I mean all customers of Ofcom not just Sky. It’s os obvious that Openreach will act on the interest of BT group as they are the sole shareholder.
So many armchair regulators on this forum.
That lot might be, but I’m no armchair regulator, I am a regulator. But I don’t work for Ofcom, thank goodness.
Don’t think you need to be an armchair regulator to suggest that helping out a business with a current market cap of $160 billion against a business with a market cap of £12.7 billion isn’t necessary.
Comcast actually have about the same number of customers as BT Group. The difference in market cap reflects three things:
1) that Comcast are much better at selling content than BT (hence why they bought Sky) so much higher ARPU
2) that US equity markets offer higher valuations pro rata due to our own government’s systematic efforts to make UK equity markets less attractive for retail investors and pension fund investors
3) that US regulators are less effective and more easily captured than UK regulators, so that US customers of regulated businesses pay more than they have to.
The only place where Ofcom can help BT would be by addressing point 3 and permitting BT to charge more, and reducing competition. I don’t think that’s ever going to be the case, but even if it were, would that be a good thing for anybody other than existing BT shareholders?
There is a pov that the drive towards the move from a copper to a glass network is being driven by a certain billionaire shareholder who wants to realise the estimated £70bn worth of copper in the ground.
Had the national telcom network remained a national asset, then that £70bn could have been used by HMG to provide services rather than just making foriegn shareholderseven richer
Why would they still install copper?
“Why would they still install copper?”
Because there is no fibre nearby!
Can you reference the £70Bn estimate? I saw 200,000 tonnes at £6000 a tonne. i.e £1.2Bn not a shabby amount in itself but way different.
It is unthinkable that the UK flag carrier is prevented from owning a UK local network. It is equally unthinkable that OFCOM will ever think that it’s work on local network regulation is done.
Look at the BT and Openreach fanboys coming out.
why would anyone want one private companby running the network I don;’t know, now we have larger choice of networks and can give Openreach the boot.
while i was a bit worried about going to another network and getting off Openreach, to be honest I have been wanting to do it for a long time, that is one of the reasons I went for wireless broadband a few years ago, sadly it t did not work out, and I had to go back to Openreach, by that time they had FTTC.
But now I have made the move again from Openreach I want to stay away if all goes right .
The national network infrastructure should be nationalised.
If the network was publicly owned we’d have probably seen FTTP brought in 20 years ago.
Openreach is ran for shareholders, not for public interests.
That is same as all companies that have shareholders, stuff the consumers and the employees as long as they can make money and people carry on buying. I do agree that the network should never have been sold off.
If the network was publicly owned, we would see the money diverted away from telecoms and into other public services such as schools and hospitals. Rightly so.
If you look at the performance of UK telecom shares such as BT and Voda, or the money haemorrhaging away in alnet debt, no shareholders are making hay around here.
Doesn’t matter, infrastructure that is in the public’s interest should be kept in public hands. Same goes for all other core utilities.
Privatisation has been a disaster. The state of exchange buildings maintenance is a testament to that. Your logic is flawed as if there’s no money to be made nobody will invest in a private company. The reason it’s taken this long for fibre to be built will be lack of incentive for a monopoly to act. Openreach are a monopoly. Altnets aren’t the solution either, it just gives the illusion of competition when all you’re doing is putting an arm up Openreach’s back.
Openreach in public hands with complete control would give far better service than whatever you want to call the current situation. Managers pressed to deliver numbers to satisfy managers that are pressed to deliver numbers. Means jobs are not correctly processed just to satisfy stats and work within a broken system that pretends to care about customer service.
I’ve lived and breathed it, I know the game they’re playing and it’s not healthy long term for any of the staff involved and frankly a waste of time and money on a national scale. Jobs that could be done on the day binned because it’ll take longer than 2 hours, because they’ve got to satisfy OFCOMs service levels to avoid fines. Great idea, but leads to bad behaviours by Openreach to achieve targets.
Furthermore, if there’s no money to be made, why do egomaniacs like Philip Jansen get attracted to these positions? Totally flawed logic. There’s money to be made, maybe not immediately but long term. That long term investment could be publicly owned and the savings passed onto taxpayers that owned the network in the first place.