Business Regs

Openreach structural separation – a call for inputs

trefor_thumbI happen to be writing a paper. It will probably never see the light of day…. though maybe in an archeological dig of Esher in 2,000 years time there could be some interesting head scratching going on if it were uncovered.

The subject is, broadly, “Arguments for and against the structural separation of BT”. In a nutshell, should BT’s Openreach subsidiary be wholly separate, or should we have the status quo….. or maybe some hybrid in between.

The arguments against I have largely got to grips with – one only has to look at the railways to see the issues generated by Network Rail’s status against the train companies which I would suggest is a potentially analogous situation for a future structurally separate Openreach….. but I could especially do with some inputs on what you all think for the arguments for might be.

Feel free to comment away!


Peter Farmer

By Peter Farmer

Peter Farmer is the Commercial and Regulatory Manager at Gamma, writing here on Trefor.Net in a personal capacity. He sits with Tref on the Internet Telephony Service Providers' Association Council and is their Chair of the Regulatory Affairs Committee.

Peter's experience covers consultation responses and disputes with Ofcom, lobbying government (UK and European) on telecommunications matters, litigations at the Competition Appeal Tribunal, Court of Appeal and Supreme Court. Despite all of that, and having three Masters degrees, his main job is actually being a Personal Assistant to his two cats.

14 replies on “Openreach structural separation – a call for inputs”

I don’t really know much about network rail to make comparisons with, apart from the fact that they could run fibre along their network to all the rural communities but they don’t.

Regarding openreach, this monopoly has far too much power, and is holding the country to ransom. Their infrastructure has not had the investment needed over the past decade. Their exchanges are crumbling, with leaking roofs and broken windows. The copper mile to the homes is rubbish, with lines growing through trees, very old poles which blow down in the wind, lines running exposed over fields and general decay.

They have got all the government funding for ‘superfast’ but millions will still be left in the digital slow lane because all they are doing is cabinets, which don’t help those on long line lengths.

Whether separating them from the sister ship would do any good I don’t know. I just know somebody should do something. Otherwise the sister ship is going full steam ahead into content, and openreach will be on the pyre with us poor taxpayers picking up the tab in 2020 when government finally realises they are wearing no clothes… like the emperor, realisation will dawn and the weasel words will be exposed. It isn’t fibre broadband at all, its still the old beat up copper crap.

the first url redirects Walter, so can’t read it. The other two are prime examples of what we are trying to get through to policy makers. Well done for documenting them. They are part of the digital britain history book now, and these people will go down in history as the digital dinosaurs who left us out in the slow lane, becoming a third world digital nation.

Sorry about the first link.

In recompense here’s another one describing what must surely contravene trading standards. The concept of employing installation subcontractors who only look for the DSL sync light and then scarper without any form of line or proper performance test beggars belief. How can a commercial monopoly contemplate such behaviour when they have usually been trusted to behave competently ? Is this a case that BT realise they can charge for the installation and then after further obfuscation, assuming the end users themselves have a sufficient understanding of a quite complex mechanism, charge yet again to repair a faulty line ? Just how many times does this have to happen before either Ofcom wakes up or there is a major BBC Watchdog type of investigation ?

Per discussion on Twitter, Tref.

Obviously the above regarding capacity is nonsense; everywhere including commercial areas gets 100 tie pairs initially with more capacity added as each group of cards hits 80% utilisation.

The additional capacity is considered OpEx hence paid for by Openreach / BT.

That would not change with structural separation; no company is going to spend on capacity it isn’t projecting using, even B4RN…

That’s an old video you found Carl, the side of that cabinet is full now. B4RN always plan ahead and the community buy the equipment needed as soon as its needed. That’s how it works. The main difference is that its very easy to add capacity to a proper fibre network. It isn’t easy with fTTC as Walter has so ably documented and many other places are finding out the hard way.

This is great stuff guys! Many thanks. The issue about it being a monopoly either separated from the sister ship or not is especially relevant – need to think through any remedies for that.

Agree something needs to be done; at least Ofcom is doing something in the Fixed Access Market Review on service standards. I use the term “something” loosely – it’s an improvement (couldn’t get worse to be fair) but falls massively short of what is needed.

presumably you have all the arguments you need on the contact front right? ie they would at last be free from the diktat of BT centre and CPs would be able to contract with Openreach rather than BT plc, and likewise BT would be able to contract with Openreach at last – which might inject some normality into the rather odd world of BT contracts as we know them today?

@ Carl T,

The “Need” to match our procurement specification for our SEEDA RDPE Grant-approved project was to have an un-populated capacity for 500 lines per PCP as the cabinets are reasonably large. Our project, importantly also specified a new fully ducted fibre backbone to allow rapid deployment of FTTH to cater for the outliers initially. BT destroyed our project but they didn’t say and nobody asked if they were proposing a like-for-like substitution.

However we also see that BT are installing Huawei cabinets up to fully populated 288s which presumably BT can reclaim the cost via SCC/BDUK even though the required ducts and tie cables are restricted to only 100 services before the pantomimes I’ve described are likely to happen. Assuming SCC have accepted BT’s recommended FTTC size, why aren’t the full compliment of tie cables being (so easily) installed from day 1, rather than causing more street disruption and delays ?

Below is what Regional Development agencies were saying to Ofcom in 2007 in response to one of their many consultations, this one being “Future broadband – Policy approach to next generation access”. Some dubious aspects as it turns out, but the overall recommendation in 5.8 still holds good in my opinion.

5. Ofcom question 5 – Do you consider there to be a role of direct regulatory or public policy intervention to create artificial incentives for earlier investment in next generation access?

5.1. Yes. The RDAs do not consider that the current environment encourages the investment required to meet the needs of UK plc.

5.2. To secure a completely new access network the RDAs believe that the form of regulation needs to be clear and understood to encourage investment.

5.3. RDAs are concerned about the potential tensions between the long-term competitive needs of UK plc and the shorter-term commercial imperatives of private companies who need to deliver shareholder value.

5.4. A new model to encourage longer-term investment in a new NGA network needs to be developed. RDAs do not believe that NGA will happen in a timely and efficient manner with existing telecommunications investment models where very short-term returns are expected.

5.5. The market led approach has been successful to date. The functional separation of BT and BT Openreach along with the principle of equivalence has delivered first generation broadband to most, though not all, of the UK. However, we would argue that this approach has had much less impact on headline speeds, especially when compared with some of our major international competitors. It is worth noting that the development of the current market and regulatory framework for first generation broadband has been against a background of an existing local access network inherited by the incumbent operator.

5.6. NGA is a completely new access infrastructure. RDAs believe that to provide a truly ubiquitous NGA network a step-change in policy and regulation is required. If the market-led approach is dogmatically applied to brand new NGA infrastructure this could lead to different NGA scenarios in different places with a resulting regulatory complexity and overhead that detracts from the objective of securing a good deal for the end-users.

5.7. With the existing market-led policy, RDAs understand Ofcom’s light touch regulation style. However, RDAs believe that a policy debate must now take place and that a regulation method such as “utility style” needs serious consideration to ensure that investment takes place in a new NGA network to provide the same access and benefits to all citizens wherever they reside.

5.8. The RDAs believe that the way to maintain an NGA infrastructure once built is by a separate “Infrastructure Company” with utility style regulation and a Universal Service Obligation.

5.9. RDAs note the encouragement in the document for the work of the Broadband Stakeholders Group to measure the potential social and economic value of NGA. The RDAs will continue to support this and other work that will contribute towards the continuing public policy debate that has already started.

What a current disaster we have all inherited as Ofcom quite obviously did not support the RDA’s views. The Nation will “Repent at leisure” as no doubt will many other Public Servants who are now perhaps awakening to the unmanageable rural quagmire we now must repair; but tragically without the economies of scale of the still asymmetric slightly better off.

I wonder if some Public Servants might be awakening to the very significant hyperfast symmetric benefits to be obtained from a B4RN Dual-redundant P2P FTTH model at a fraction of the costs dictated by the incumbent ?

BT aren’t installing fully populated 6 card Huawei 288s Walter, and the expense of line cards is covered in the BDUK agreements. In case you hadn’t noticed, and clearly you hadn’t, these cover both CapEx and OpEx.

Nowhere else is getting cabinets fully populated with cards and tie cables they are being done as required. I’m not sure what makes Ewhurst so special that you think it should be treated differently from any other commercially deployed area. At 80% utilisation of existing resource the appropriate work is triggered to upgrade which can cause delays.

If you failed to get BT to sign the appropriate contracts to ensure 500 line capacity on the cabinets that’s a commercial and contractual failure.

The B4RN FTTH model is not reproducible across the country, would this be doable in a city, or indeed any urban or suburban area?

‘B4RN adopts a different approach, laying the duct not on the highway but across farmland on the other side of the wall so it is all soft digging. We then install narrow bore duct into which we blow fibre mini cables once the route is completed. Digging a narrow trench and installing duct within it is dramatically less expensive across private farmland than along the highway. The work can be done by agricultural contractors and the farmers themselves; it’s not high technology, similar to laying a simple water or drainage pipe which they do all the time.’

P2P FTTH is actually done with 2 fibres very commonly where the P2P architecture is used by the way, however this isn’t supplying resilient routing to individual properties, there is no diverse routing on the customer drops. Usually the second fibre is there as a spare and for alternative services such as video.

@Chris ‘The main difference is that its very easy to add capacity to a proper fibre network. ‘

Still needs a new line card / switch ports and connection between those ports and everything else. If there’re no spare fibres / tie pairs available you still need to do civils work.

I’m sure it’s an old video, regardless you had precisely zero ports free in that cabinet at the time. No different from me showing you a video of our local FTTC cabinet with 2 line cards full then, and 5 cards with room in a 5th one now and saying it’s all good. Both being built out according to demand, which is common sense.

A lot that can be complained about as far as NGA goes, the reduction in FTTP being a big part, but capacity isn’t really one of them.

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