In recent months, Openreach has been at the centre of telco news, and not always for positive reasons. The company has been positioned at the frontline of the drive towards “superfast broadband for all” by the government, which the competition hasn’t taken kindly to.
After a £600 million deal was proposed that contracted Openreach to bring superfast broadband to 1.4 rural homes, companies such as Talk Talk, who wished to have more of a say in Britain’s digital infrastructure future, threatened legal action.
Openreach’s separation from BT
Most internet service providers (ISPs) will have mixed feelings about the reform of BT’s Openreach infrastructure division, on the one hand welcoming any change, however small, and on the other wishing that Ofcom had enforced a complete divorce from the parent company.
>See also: BT and Openreach told to split by Ofcom
In the strange pseudo-separation which has followed Openreach has become a wholly-owned subsidiary of BT Group with a new Chairman and Board whose members are supposed to have no affiliation to BT at all. An estimated 32,000 BT Group employees are now Openreach employees, and Openreach will be run as a separate company with its own non-BT branding.
So far so good, but ultimately Openreach is still accountable to BT Group, with the telco successfully persuading Ofcom that keeping its network assets under BT Group control was a key requirement for the company in meeting legal obligations to shareholders and employees.
Dress it up (or down) anyway you want to, but the truth of the matter is that the vast majority of UK copper and fibre broadband infrastructure is still under BT control and rival providers will have to continue leasing BT-owned wholesale network capacity (via Openreach) to serve their own customers.
The question now is whether the newly “independent” Openreach delivers on its promise of making it easier for BT’s retail competitors to provision new circuits and services using that infrastructure whilst extending faster fibre connectivity to more UK businesses and consumers.
Competition is much-needed in fibre broadband, at a time when the cost of the technology continues to come down and it begins to merge with traditional networks. It is crucial that businesses throughout the country have access to commercial-grade broadband; this will allow them (particularly SMEs) to take advantage of higher speeds and deliver greater results for themselves and their customers.
People talk a lot about consumers not being able to stream YouTube or Netflix, but there are a lot of strides being made by providers in this area. However, UK businesses are being left behind in some ways; they can’t take advantage of certain new technologies because they’re still running on old infrastructure.
The coverage, breadth, speed and reliability just isn’t there, and that is frustrating. With Brexit looming, we have to start competing as the UK, not as part of the EU, and smaller businesses are left at a disadvantage by sluggish broadband speeds.
BT and Openreach have long argued that the pace of that expansion is dictated by the considerable costs involved in building new networks, one reason why Ofcom has also mandated that Openreach consider different infrastructure investment models to speed things up.
That led to initial talks with Vodafone to jointly fund a roll out ultra-fast fibre in select British cities. But while Vodafone has not ruled anything out, any Openreach deal looks less likely after it announced plans to roll out gigabit speed FTTP to 5m UK homes in partnership with CityFibre in November.
>See also: Realising a truly democratic internet
Openreach is certainly open to more flexible co-investment arrangements (under the watchful eye and pointed encouragement of Ofcom’s dedicated Openreach Monitoring unit), but any collaboration with any other non-BT owned UK ISPs may take a long time to thrash out.
The revolution of digital infrastructure
At the forefront of the UK’s digital reform is the £400 million Digital Infrastructure Investment Fund (DIIF), with its main aims being to “revolutionise Britain’s digital infrastructure, make internet access more reliable for homes and businesses, and enable more people to work remotely without disruption”.
This is a good start, but it does not negate the fact that broadband connections are mostly run off networks that are incapable of keeping up with modern businesses and consumers. It is becoming crucial for businesses today to access high-speed broadband as they aim to become more innovative, affording their employees to work remotely wherever their location as a benefit.
Internal legacy technology is perceived as limiting organisations from their digital strategy by 49% of business network managers, and innovation is being hindered further by sub-par broadband speeds.
In January the Government announced that it had met their goal of giving 95% of the country access to superfast broadband, but is this an accurate picture of the UK’s connectivity?
Rural access to broadband is still a struggle, but according to ThinkBroadband, even parts of our biggest cities are being left behind. It is clear there is still much more to be done.
Sourced by Russell Crampin, UK managing director of Axians