OPENREACH TO SEPERATE FROM BT GROUP

BT has now agreed to float Openreach of as a separate wholly owned BT company and it will no longer be a part of the BT Group. It will also be required to consult with Sky etc on major investment plans

http://www.bbc.co.uk/news/business-39228115

Edited by deleted (Fri 10-Mar-17 11:22:28)

In reply to a post by Bob_s2:

BT has now agreed to float Openreach of as a separate wholly owned BT company and it will no longer be a part of the BT Group. It will also be required to consult with Sky etc on major investment plans

http://www.bbc.co.uk/news/business-39228115

WRONG WRONG WRONG. Check your facts before posting rubbish.

BT and Ofcom have reached agreement on a long-term regulatory settlement that will see Openreach become a distinct, legally separate company with its own Board[1], within the BT Group.

It's Openreach, not Opnreach and why the cap locks?

There is no FLOATING involved

BT and Ofcom have reached agreement on a long-term regulatory settlement that will see Openreach become a distinct, legally separate company with its own Board[1], within the BT Group. The agreement is based upon voluntary commitments submitted by BT that the regulator has said meet its competition concerns.
Once the agreement is implemented:
� Around 32,000 employees will transfer to the new Openreach Limited following TUPE consultation, and once pension arrangements are in place.
� Openreach Limited will have its own branding, which will not feature the BT logo.
� The Openreach CEO will report to the Openreach Chairman with accountability to the BT Group Chief Executive with regards to certain legal and fiduciary duties that are consistent with BT�s responsibilities as a listed company.

Not quite. Openreach Limited will be wholly owned by BT Group, much like Plusnet are.

Also very important:

The implementation of the agreement is subject to the satisfaction of certain conditions. These include new legislation providing that the new company�s pension liabilities will be covered by equivalent arrangements to the current Crown Guarantee, thereby ensuring the transfer does not mean that its BT Pension Scheme members lose that protection, and the BT Pension Scheme Trustee having consented to Openreach Limited becoming a participating employer in the scheme.

In reply to a post by AndyHCZ:

It's Openreach, not Opnreach and why the cap locks?

Easily sorted as well as the spelling mistake. You could have done so in making your post .

In reply to a post by AndyHCZ:

Also very important:

The implementation of the agreement is subject to the satisfaction of certain conditions. These include new legislation providing that the new company�s pension liabilities will be covered by equivalent arrangements to the current Crown Guarantee, thereby ensuring the transfer does not mean that its BT Pension Scheme members lose that protection, and the BT Pension Scheme Trustee having consented to Openreach Limited becoming a participating employer in the scheme.

Have you a link to where that is from please? I don't recall seeing it in the BT announcement MrSaffron links to in the Main Site News Article.

That simply says TUPE will apply. So either I've missed it, or the announcement of what will happen to current employees' pension rights is premature, or your quotation is from an earlier internal BT document and superseded. No mention of new legislation being required.

7. Transfer of Openreach LoB employees

7.1 Upon the ASA taking effect in accordance with its terms, the employment contracts of c.32,000 employees in Openreach LoB will transfer from BT to Openreach Limited by way of a transfer under TUPE, assuming that TUPE then remains in force and provides for such a transfer.

7.2 Following the transfer referred to in paragraph 7.1, Openreach Limited will have control over the employment of the employees referred to in paragraph 7.1 and those recruited by Openreach Limited subsequently (together, the Openreach Employees).

7.3 Subject to the satisfaction of the conditions set out in the Notification, any employees who transfer to Openreach Limited and who are active members of the BT Pension Scheme at the point of transfer will continue to be eligible to participate in the BT Pension Scheme on the transfer of their employment to Openreach Limited, with no break in service as a result of the transfer.

7.4 Openreach Employees shall include:
(a) all field engineers working for the Openreach LoB from time to time, including their line management up to and including the Openreach CEO;
(b) those employees involved in the design, planning, implementation and in-life service management of the products provided by the Openreach Division, including their line management up to and including the Openreach CEO; and
(c) those employees who carry out activities which are ancillary to those described in (a) and (b) above, those who support and manage them, and those who undertake the sales function of Openreach LoB.

Openreach LoB (Line of Business) is part of the new Openreach Division of the Group, the other part being the new Openreach Limited. It basically comprises all the kit and assets required for Openreach to function, which remain BT Group assets. See Section 3 of this link, in the announcement document linked to above.

Edited by RobertoS (Fri 10-Mar-17 11:25:47)

I am afraid you are incorrect. It is being separated and floated off as a separate company. You are assuming a stock market floatation but that assumption is incorrect,.. It will become a Private Limited Company wholly owned by the BT group but will not be a part of the BT group ie it will no longer be vertically integrated

It will have its own company name and number and own board and its own P&L . It will b e totally spate from the BT Group. The only connection with the BT Group is that they will own a 100% of the shareholding.

I suggest you check your . IT is being floated off as a separate company and will no longer be a part of the BT group but will be owned by the BT Group

The floating of a company does not mean there will be a stock market listing. Openreach will be floated as a private limited company ie no public stock lising

Which is what I posted. It at that point ceases to be a part of the BT Group but will be owned by the BT Group and that's a very different thing

It's here - http://btplc.com/News/#/pressreleases/bt-and-ofcom-r... at the bottom in the Notes to Editors.

The conference call with analysts will almost certainly cover it.

Bob_s2, it will be part of the new Openreach Division of BT Group. As explained in my recent post. Its accounts will be shown in the BT Group ones.

Edited by RobertoS (Fri 10-Mar-17 11:35:00)

Thanks Andy. Strange that a transfer under TUPE requires legislation. I expect it is something to do with the current legislation that privatised BT in the first place.

Edited by RobertoS (Fri 10-Mar-17 11:36:15)

Sorry, but what you've just written doesn't make sense and is wrong.

In reply to a post by Bob_s2:

I suggest you check your . IT is being floated off as a separate company and will no longer be a part of the BT group but will be owned by the BT Group

The new entity will be a limited company, wholly owned by BT plc. Anything majority or wholly owned by BT plc is part of the BT Group of companies.

In reply to a post by Bob_s2:

The floating of a company does not mean there will be a stock market listing. Openreach will be floated as a private limited company ie no public stock lising

The term 'flotation' is the process by which a private company becomes a public company through issuing and selling of shares to the public and institutional investors. There will be no flotation of Openreach.

All that is happening is that the trading entity, Openreach, will be separated off from BT plc into its own legal entity.

Edited by deleted (Fri 10-Mar-17 11:39:58)

I imagine this is more of a formality that has been discussed in depth with OFCOM and government officials.

I cannot see why it would not happen, particularly seeing as it's what OFCOM wanted and the government have welcomed.

Check your facts. and then get back under your bridge.

INCORRECT. IT becomes a totally separate legal entity and as stated previously it has its own company name and board. It will not report to the BT board as that would break company law for starters (other than for some regulatory requirements)

Before you keep posting, please check what you are saying as it's incorrect.

1) There will be no flotation.
2) Openreach Limited will be part of the BT Group.
3) As BT plc will wholly own Openreach Limited, they can appoint and remove directors at Openreach Limited, as is their legal right under UK corporate law. This is a very important for shareholders.

You are right that it will not be reporting to the Group board. You are also right that a new private limited company will be formed.

Almost all the rest of what you have posted in your OP and in replies to many is completely wrong.

Read the linked announcements and as many links as you like in the thread. Andy's reply to me when I queried his earlier quotation might be the easiest for you to start with.

Edited by RobertoS (Fri 10-Mar-17 11:52:03)

I am afraid you are incorrect, the majority will interpret the word float to involve a public share issue etc

The BT Group will retain a veto on Openreach CEO but require Ofcom approval

No TUPE is a legal requirement when a company floats. A TUPE Consultation has to take place with the staff. TH current employment conditions will transfer across under TUPE the one major exception is occupational pensions these are not covered by TUPE

You keep using the word 'flotation' - there is no flotation happening. It's completely the wrong word to use here.

The closest word to what is happening here is 'divesture'.

Then they are wrong a flotation is any float of a company and shareholding be it a Public or Private listing. AS o OPENREACH is being floated TUPE will for example come into play with most employment conditions transferring across the exception being Occupational pensions as TUPE does not cover them so that ill be down to a separate agreement

I doubt the chairmen of the BT Group could have a general veto as that I believe would be in breach of company law unless the VETO is restricted to regulatory
issues only

Edited by deleted (Fri 10-Mar-17 11:58:18)

https://www.reference.com/business-finance/differenc...

You appear to be saying it will be Openreach Public Limited Company, and public would mean TalkTalk if it wanted can buy shares on the open market.

It will be Openreach Ltd i.e. no public shares

Rather interestingly, it looks like Adrian Kennard of AAISP had already been running a dormant company called Openreach Limited.

This entity was 'voluntarily' dissolved by Adrian Kennard last year.

It is a floatation into a separate company. IT does not mean a stock market flotation that's a different thing. It is being floated as a Private Limited Company. .

So I suggest you contact the legal team at Ofcom...

https://www.ofcom.org.uk/about-ofcom/latest/media/me...

Executives will be accountable to the new Board. Openreach�s Chief Executive will in future be appointed by, and accountable to, the Openreach Board. BT Group will be able to veto appointment of the Openreach CEO, but only on notification to Ofcom. The Openreach Chief Executive will then be responsible for other executive appointments, and will report to the Openreach Chair � with a secondary accountability to the Chief Executive of BT, limited to necessary legal, fiduciary or regulatory obligations.

You basically need to be more precise in your use of the word floatation, and make it clear you are referring to a privately listed company (abbreviation Ltd)

And I'll keep on that you need to reconsider your use of the word floatation as its misleading people.

You keep listing it as Private Limited Company also in the full knowledge this will shorten to PLC thus giving the impression to people it will be on the stock market.

Keep trolling and the door will close.

The fact remains, it will be a company within (a new) Openreach Division of BT Group.

You seem not to have (properly) read a single published document. There are links all over the place. If wherever you read it says it will not be part of BT Group, than that source is simply wrong.

How about a link to your original source please?

In reply to a post by AndyHCZ:

'voluntarily'

ROFL

Good find .

Edited by RobertoS (Fri 10-Mar-17 12:10:07)

It's not only misleading people, it's wrong. Pick up any corporate finance text book and it will explain that the term 'flotation' is the process by which an company's privately held shares/bonds become listed on the Official List and tradable on an exchange.

In reply to a post by AndyHCZ:

Rather interestingly, it looks like Adrian Kennard of AAISP had already been running a dormant company called Openreach Limited.

This entity was 'voluntarily' dissolved by Adrian Kennard last year.

Even more interesting is this search, the second result. Either someone else who has been forced off the non-Limited version, or a stooge. The new name certainly suggests a non-voluntary name change and the new one is of RevK's style.

Some example definitions of flotation:

Flotation is the process of changing a private company into a public company by issuing shares and soliciting the public to purchase them.

Definition of flotation: Offering a firm's shares for the first time to the general public, by listing them on a stock exchange.

I can't find any that suggest it can be used for a company that has not sold shares to the public - maybe Bob will admit he is using the wrong term?

Not quite Bob, but close. Alex Bloor is director

I hate to disturb the dispute above, but I was rather more interested as to whether or not this will actually mean a more responsive openreach and a reduction in the foulups that seem to happen when a fault develops.

I am sure that very few people will take to the airwaves when something good happens under the current arrangements, but I do wonder about the number of disasters I read about.

It's going to be to protect the rights of the staff being moved to the new OR as otherwise any more pension right they accrue would not be covered by the Crown guarantee. I suspect that the opposition of those staff and, possibly, the trustees of the funds would could have caused a judicial review, especially if it had been forced. Most likely BT insisted on it too.

I can't believe Ofcom would have agreed to this condition unless Sharon White had already cleared it with the government. I imagine it will be a quick bill, and I can't see much Parliamentary opposition as Labour certainly won't want to be seen as damaging workers' pension rights and only a few die-hard right-wing Conservatives might oppose It also doesn't increase government liability over what the courts have alread determined is the scope of the Crown guarantee.

The Crown guarantee might be a useful card in the future too as I cannot imagine any government wanting to pick up a deficit which will surely be way over £10bn on the next auditing. They had to pick up a huge deficit liability with the Royal Mail pension fund. They will not want to see BT fold.

That is manifestly not what a flotation is. A flotation involves a public share issue. This is just the creation of OR as a wholly-owned subsidiary.

Here you are

http://www.investopedia.com/terms/f/flotation.asp

Incidentally, the new Openreach will not be a very attractive flotation target anyway as, even though it will make the investment decisions, the new agreement means that BT Group will be the legal owner of the network (and any future additions) and any Intellectual Property. OR will, in effect, be a management and services company, albeit in the odd position of making investment decisions on assets which belong to its parent and without any direct involvement of the same.

Yes, I got that far, but was working on an iPad in bed! It listed him with 4 directorships and no resignations.

I assumed therefore there was no connection with Adrian. I think I also checked resigned directors for AA but maybe those don't show on CH beta. ....

Checks elsewhere, no better.

So digging because of your post, I found an old blog, which after ploughing through some verbosity about a furniture shop, came up with "We (A&A) spend millions a year with BT ...".

So what's the relationship? Is/was he just a senior employee?

It will not be a diivision of BT Group. It will be a wholly owned subsidiary of BT Group. as a private limited company. A rather odd one to be sure - it will have none of its own network assets; legal title will be to BT Group, as will be IPRs. What it will not be is a division.

3. The Openreach Division

3.1 The Openreach line of business (the Openreach LoB) means the business of BT which consists of the products listed in paragraphs 3.2 and 3.3 below, the trading associated with them and the assets referred to in paragraph 3.5 below.

3.2 The Openreach Division (which means, taken together, Openreach Limited and the Openreach LoB) shall provide on behalf of BT plc those SMP Products which are provided over BT�s Access Network and BT�s Backhaul Network and which are important in supporting future downstream competition. These products currently include:

(a) Dark Fibre Access;
(b) MPF;
...
....

Link in the last line of this post. The relevant bit starts on Page 2.

In reply to a post by Bob_s2:

INCORRECT. IT becomes a totally separate legal entity and as stated previously it has its own company name and board. It will not report to the BT board as that would break company law for starters (other than for some regulatory requirements)

There's a chart floating about that shows the new company setup. I don't know if it's public but the details of what it shows ARE public.

Openreach CEO reports to the independent Openreach chairman and independent Openreach board. Who then report to BT Chairman and BT Group Plc Board. That's a FACT.

It also says that the Openreach CEO is "accountable to BT CEO for issues relating to BT's responsibilities as a publicly listed company".

So the Openreach Division essentially just becomes a shell division within BT Group that owns the assets and (presumably) the shares in the new limited company. I'm not really sure that's what people are going to be thinking of when they use the name Openreach in the future, especially as there's not to be any mention of BT on Openreach vans and equipment.

In reply to a post by RobertoS:

In reply to a post by AndyHCZ:

Rather interestingly, it looks like Adrian Kennard of AAISP had already been running a dormant company called Openreach Limited.

This entity was 'voluntarily' dissolved by Adrian Kennard last year.

Even more interesting is this search, the second result. Either someone else who has been forced off the non-Limited version, or a stooge. The new name certainly suggests a non-voluntary name change and the new one is of RevK's style.

That guy seems to spend an awful lot of his time worrying about BT Group.

To me the whole scheme is utter tripe. A stitch-up between BT and Ofcom to stop the criticism and demands for a split.

I admit I've only read the whole Ofcom/BT agreement once, hours ago, and two or three sections a few more times, but it doesn't really amount to much at all in my eyes.

It does seem to allow for more cooperation with Sky/TT/Vodafone over infrastructure development, possibly even new product development research, but largely a damp squib.

Edited by RobertoS (Fri 10-Mar-17 18:40:25)

I'm a little surprised BT's lawyers were not trying to protect their trademark with this one.

Either way though, it does seem like a waste of £12 to start the company, £13 for the AR01 and then £10 for striking it off.

I like the FT's summary of things:

Ofcom reaching a voluntary agreement for legal separation of Openreach where BT does nearly nothing and Ofcom crawls back into its box without anything it set out to achieve.

Goldman Sachs give a good summary:

1) We would not expect a legally separate Openreach to make materially different strategic or investment decisions compared to if it were a legal part of BT. Crucially, we believe Openreach, as a legally separate entity, will continue to prioritise �Future of Fixed� G.fast copper upgrade technology investment (subject to conditions set in an upcoming Ofcom �WLAR� review), which we see as value accretive. This compares to fibre-to-the-home (FTTH), which we see as likely value destructive.

While today�s news is a positive for BT in our view, we expect further ducts and poles regulation to come with the WLA.

2) It does not appear that BT has had to commit to any material FTTH roll-out to reach the agreement. This was a key concern expressed by investors, with a concern that FTTH would be value destructive

3) BT will continue to set the capex budget for Openreach. The limit with regards to capex decisions for Openreach is £100 mn and anything above needs to go to BT board.

4) While Openreach management will report to an independent Openreach board, the reporting line into BT Group will not be severed. Ofcom states �Executives will be accountable to the new Board. Openreach�s Chief Executive will in future be appointed by, and accountable to, the Openreach Board. BT Group will be able to veto appointment of the Openreach CEO, but only on notification to Ofcom. The Openreach Chief Executive will then be responsible for other executive appointments, and will report to the Openreach Chair � with a secondary accountability to the Chief Executive of BT, limited to necessary legal, fiduciary or regulatory obligations.� The BT CFO is on the Openreach board.

5) There is limited detail on the pension allocation.

Investor focus has been on Openreach treatment for the last 18 months and this has been seen as the key regulatory uncertainty. As such, we see today�s announcement as a material positive for the shares. But as we state above, we do not believe Openreach decision-making will change materially as to the method of upgrading the network or how to monetise it.

However, there are two more ongoing uncertainties for BT:

1) Wholesale Line Access Review (decision expect this �spring�) - this is potentially more influential to BT returns. In this, Ofcom will decide whether Openreach will have wholesale pricing flexibility on G.fast. This is critical to its monetisation of the network upgrade.

2) B2B - following the recent profit warning, this has resurfaced as a business unit with limited visibility, at least for investors.

So they are saying 2+2 still = 4 ?

That FT quote is a very good way of putting it. That live feed goes on a fair time, now I've found it.

I also found a fuller article which doesn't add anything we don't know. There seems to be another article on the subject, behind a "Premium" paywall I didn't know existed. It gives access to the e-paper.

I'm sure I had that when I first subscribed .

Edited by RobertoS (Fri 10-Mar-17 23:01:12)

It will be interersting to read the verdicts of LLU ISPs and how this might impact on their service provision, customer response and competetiveness.
But it feels like the continuation of the status quo but with the appearence of more even-handedness.

Gosh! It seems to be smoke-and-mirrors everywhere you look these days, doesn't it!

Well if we chaps on here are confused by how it will finally look, it seems most of the media don't seem to understand it either. Prominent headline runner on the bottom of BBC News last night referred to Openreach as 'the company responsible for the UK's broadband infrastructure'. They conveniently forget that they also supply most of our landlines, the associated exchanges, and that a lot of the broadband infrastructure is independently provided by LLU providers and Virgin. But of course slow broadband is the flavour of the month...

In reply to a post by dsergeant:

But of course slow broadband is the flavour of the month...

Even though most people now have more speed than they want.

Post deleted by MrSaffron

I agree with your first, third and to some extent fourth lines.

That Ofcom continue to remain a very weak organisation in the face of BT Group I accept. A big problem is that it's head took the post with little to zero knowledge of broadband in particular and telecoms in general.

She is clearly a highly competent operator in other fields, but I don't think that is enough. For something so complex and so politically sensitive it seemed a strange appointment at the time, and so it has proved so far.
_{Edit: Quote of the post replied to removed, following what happened to it.}

Edited by RobertoS (Sat 11-Mar-17 10:40:10)

The problem for OFCOM was that its hands were ultimately tied. In the eyes of experts, they would have failed to force the legal separation of Openreach with the European Commission.

A good point. But a decent commercial/corporate EU lawyer wanting to rubbish this pseudo-separation would have no problem whatsoever in doing so.

BT Group already has many subsidiary companies - some fully owned and some majority owned, this will not really be much different.

In reply to a post by MHC:

BT Group already has many subsidiary companies - some fully owned and some majority owned, this will not really be much different.

Yep, and some of them are major suppliers to Openreach such as BT Cables and BT Fleet which is probably another reason why BT resisted full separation.

If the poster has proof of their accusations then they should take it to appropriate authorities, otherwise it just reads as random musings that could land the poster with libel claims.

That post seems to be the best summary for how I feel about it.

Compared to a few months ago, when Ofcom announced it was going to seek approval from the EU, and BT announced what the independent board would look like, it feels like almost nothing has changed.

I can understand why Ofcom have accepted it, but I don't see why Sky and TalkTalk aren't complaining. There is no gain in them *ever* agreeing.

G.Fast = Value Accretive
FTTH = Value Destructive

is some interesting terminology. Cue B4RN members using the better known "sweat the copper assets".

There's not much about the Goldman Sachs summary that I would disagree with. Quite simply, with the way that Ofcom regulate the industry, there are exactly the same economic drivers at play, and there is no reason why it will change the investment decisions on any great level.

The point about g.fast wholesale pricing is going to be interesting. It's not obvious that there's any basis for Ofcom to regulate prices on that product anyway. Firstly, nobody has got the faintest idea what the takeup is likely to be. Secondly, it's clearly in direct competition with VM's products and. in much the same areas. It is therefore likely that pricing will find some natural level. Personally I doubt there's a market for much more than a modest premium over GEA-FTTC wholesale prices. This is more about market protection.

At base, Openreach is a £5bn a year turnover company with very limited prospects for growth, in large part, because of how it is regulated. That puts a limit on the capex as if it exceeds depreciation it will increase current account costs unless it leads to other sorts of efficiencies. The ownership of OR is irrelevant in those calculations.

In addition, there is only so much Ofcom can do by just interfering in the structure of BT given the twin issues that its dealing with privately owned assets and there are historical liabilities (namely the pension fund deficit). Without the government stumping up a lot of money, it had its hands tied and was faced with the very real prospect of legal action from shareholders and pension fund trustees. That''s not to mention a period of great uncertainty and a very possible drying up of investment.

Notably the German government has taken a different approach with huge wadges of public cash, dwarfing anything that the UK is prepared to do.

Ofcom have under delivered here, this is no where near a openreach seperation, BT still control the budget which was one of the main problems.

I also think they are taking a wrong path where they are helping CPs like sky and talktalk pretend openreach is not using BT infrastructure by removing the BT branding instead of doing the opposite which is having end users have a direct relationship with openreach. I think ofcom have lost it, just obsessed with competitors getting good access to openreach.

Edited by Chrysalis (Sat 11-Mar-17 20:28:28)

In reply to a post by Chrysalis:

Ofcom have under delivered here, this is no where near a openreach seperation, BT still control the budget which was one of the main problems.

After the many months of watching the debate concerning splitting Openreach from BT Group, I have yet to see a coherent argument explaining how such a split would improve broadband coverage and/or speeds for end users.

The same commercial drivers will still apply i.e. Is this ultimately profitable and worth doing.

I haven't seen any of the complainant ISPs suggest that they would be willing to commit any of their own capital to further the roll-out, but instead appear to want OR to take all the commercial risk with capital investment, so they can then offer a service over the top.

If it were to be found that OR have deployed in an unfavourable location and take-up is low or fails to recover the deployment costs, the competitors have lost nothing as they have made no investment.
I'm not aware of an agreements such as "If you deploy here, we will contribute (insert % of costs) if we don't buy X services within Y years). Instead they just shout loudly that OR are failing to deliver.

In reply to a post by Chrysalis:

I also think they are taking a wrong path where they are helping CPs like sky and talktalk pretend openreach is not using BT infrastructure by removing the BT branding instead of doing the opposite which is having end users have a direct relationship with openreach. I think ofcom have lost it, just obsessed with competitors getting good access to openreach.

My experience is that some competitors like to give the impression that they are able to deliver super-dooper-ultra-mega-fast services, unless they can't - Then it's Openreach's fault.

OR are far from blameless with their service levels and undoubtedly deserved a good kick to make improvements, but the constant cries from the pitchfork wielding mob appear to be more of an attempt at a punitive punishment rather than making improvements.

If somebody can explain to me how divesting OR will change the commercial criteria and make the unprofitable profitable, I'm happy to learn.

chrysalis most service provider don't want openreach anywhere near their end users (was frimly rebutted a whiles ago - Openreach Charter)-- and would rather not have any openreach branding at all

At base, Openreach is a £5bn a year turnover company with very limited prospects for growth, in large part, because of how it is regulated. That puts a limit on the capex as if it exceeds depreciation it will increase current account costs unless it leads to other sorts of efficiencies. The ownership of OR is irrelevant in those calculations.

By far the best post on here so far, I think you are 100% on the money.

In reply to a post by MrSaffron:

If the poster has proof of their accusations then they should take it to appropriate authorities, otherwise it just reads as random musings that could land the poster with libel claims.

Hey Ho...

Don't get Ofcom at all. This is a fudge at best. Ultimate power is still where it was before.

Would have made for more sense to tell BT that they have to sell off the retail side (broadband & phone) and make BT = openreach.

Please can you edit the Subject to Re: Openreach to separate from BT Group (not)

Else if someone replies to it without change we not only now propagate the untrue one but also its capitals and misspellings, with the *DELETED* stuck on to make it even worse.

I agree with your post content by the way . The problem there though is that it is Openreach revenue that fuels BT Retail's pension fund. There are also many other divisions, Global and Wholesale being only two. Wikipedia doesn't seem to have any of them listed and I can't fix that here and now.

Edit: Ah, found this. BT Consumer is of course what we usually call BT Retail. The final one in the list I think is usually called BT Operate, and it reads to me as if chunks of that but not all will form Openreach LoB.

Edited by RobertoS (Sun 12-Mar-17 10:35:50)

I know they dont hence my post.

But a proper regulator would be telling these providers what they want is irrelevant.

Now there is a story about ofcom wanting to reduce the money openreach get paid for FTTC ports, ofcom seem to have no clue. Just obsessed with hammering BT's wholesale operations thinking that will fix everything.

Ofcom is really coming across as a government sponsored bodyguard for all of BT's competitors and not much else.

In regards to ownership there is relevance as been part of BT group openreach will be contributing to things like dividend payments and also able to offset expenditures in other divisions such as football rights. I agree of course tho that openreach would never be able to invest more than it makes without borrowing.

Whilst I often come across as anti BT its more I just want more aggressive investment in better infrastructure and better access to the company that controls that infrastructure, the current middle man arrangement is extremely anti consumer.

Everything ofcom does seems to be with the aim of directly helping BT's competitiors and not much else.

Reduce openreach wholesale line rental whilst at same time no caps on retail line rental (maximises profit margin for retail operations whilst strangling openreach)
Intention to reduce wholesale cost of FTTC ports at dslam. Likely also with no intention to regulate retail pricing.
Honour the requests of BT's competitors to not allow openreach to communicate or have a commercial arrangement with end users, I dont even see how this benefits competition as ultimately there is still only one local loop provider.

When analysing ofcom, they dont act like a regulator, rather they act as some kind of competition enforcement officer. The only recent actions taken that directly manipulate the end user's agreements are the regulation that requires them to let people out of contracts penalty free on price increases and the ASA stuff, the ASA has been far more beneficial to end users on broadband than ofcom has. As its the ASA that has introduced things like speed estimates, unlimited usage guidelines and the changes to line rental advertising.

Where would we be without openreach?

Its easy to assume we might only have BT as the only xDSL supplier in the UK, but I dont think that would be the case. When I first got ADSL in the year 2000 it was with freeserve and it was before openreach existed, granted I never had a direct relationship with openreach, it still proves competition can exist 'without' the current openreach arrangement.

Also it would have been more likely not less that new infrastructure would have been laid e.g. without the current artificial arrangements sky have thanks to ofcom's intervention, they may have been forced to rollout their own local loop to get the operational margins they wanted, and at the same time BT would be getting more of the revenues from local loop revenues making a better business case for investment.

Before the split saga hit the press last year ofcom had supposedbly acknowledged the current system was no longer fit for purpose and some kind of big change was needed, this led to the speculation that a split was forthcoming or if not a split some other type of large change. In reality they have done what they said they wouldnt do which is to leave the system as is, the current changes are actually quite minor in the grand scheme of things, they have done what I consider to be the worst thing. I would have supported either a proper openreach split or dissolving openreach and having it simply revert back to BT (whilst removing regulated wholesale pricing). Ofcom ultimately did not have the balls to do either and simply chose the path with the least obstacles, the easy option.

To ask openreach to improve performance whilst at the same time reducing their revenue just shows how silly they have got, such a request is clearly just them doing what they told by BT's competitors.

Consumers can have a direct relationship with openreach by paying openreach directly for line rental, the call's and broadband delivery can then be provided by one of multiple companies as is now, so competition can still exist without this silly system and it would be better, unless of course you are a CP who wants to steal openreach's profit's and pretend you own a local loop.

Edited by Chrysalis (Sun 12-Mar-17 21:15:03)

Roberto

Technology, Service and Operations is the division that provides all the Design, Build and Operate of all the technology (*) for all the other divisions on a internal 'subcontract' basis. Except for the Openreach Plan, build and operations It also does all the research for all divisions on a subcontract basis ( including OR). Experts can move between projects for different parts of BT but there are information Firewalls (and NDAs) between each part with severe penalties for trying to break them.

* Includes PSTN, Interconnect, ADSL, Core, Transmission, VOIP, Ethernet, Data centres, software development and Call centres ( Not the people just the technology) etc.

Retail was split into Business and Consumer some time back.

I see this video on the bbc news site someone posted on kitz, where the boss of ofcom thinks somehow this will make FTTP more likely.

Misleading advertising? Maybe I should report ofcom to the ASA

http://www.bbc.co.uk/news/uk-36892461

It might, but in a world where plenty of plans are underway for more FTTP anyway, lots of people will get the impression that the acceleration of FTTP deployments that has been underway for a while now is down to this announcement

Ta .

I knew Retail isn't called that any more, and have several times in the past called it BT Consumer in the forums. The problem is nobody else does, so it's unlikely it will catch on. Then no-one will know what I'm talking about.

What I didn't know was that Business was split from it. I assumed it was simply another branch within Consumer. Which once it is pointed out, as you just did, was a completely daft assumption.

There used to be one called Operate, wasn't there? Which will now be a large part of TSO? I've seen a few posts by a couple of posters mentioning TSO, but didn't go looking for what it meant. I did realise when I found the page I linked to, but didn't have the full list of responsibilities you give.

Thanks again for the deeper insight .

For a while I had no idea if sky and co were genuinely bemoaning the lack of investment in FTTP but gave them the benefit of the doubt, if that was the case sky would not be happy with ofcom's decision, given they are happy I now see their true colours in this saga where they ultimately seem to just want openreach pricing to be as low as possible to maximise their own profits and continue to block end user's access to openreach.

You are right in that of course there is FTTP projects happening haphazard over the country, and it wouldnt surprise me if ofcom try to link these to this decision.

What a lot of people probably don't understand is the degree to which OR will be dependent on many services from BT Group, which they will presumably buy in. I very much doubt that OR is going to spend a huge amount of money setting up its own data centres, its own software architecture teams. It might even buy in some of its HR services from BT Group. There is also going to be a great deal of sharing of building space too.

It's rather a long way from a completely autonomous, self-contained company which would be a radically more expensive thing to achieve. I suspect that they will try and keep to a minimum the costs of this structural reorganisation.

One other thing that will be interesting to know is the accounting for the physical network infrastructure, which which will be legally owned by BT Group. I'm assuming that, as the legal owner, BT Group will carry all the depreciation charges, financing costs and will also be entitled to whatever regulated return that Ofcom permits on the estimated value of that asset (or, at least, the price regulated parts of that asset). Assuming that OR will be billing the wholesale customers (as now), then there must surely be a bill from BT Group for the use of those assets.

Just how transparent these service charges will be is another question. There will have to be separate accounts, but they won't obviously be published as the legal duty to publish (rather than produce) accounts for a private limited company are rather low.

What I don't get from my first read-through a few days ago of the BT/Ofcom agreement, is that Sky, TalkTalk et al are being invited to invest in Openreach.

That seems incompatible with all the stuff in the agreement about BT Group retaining this that and the other. The sort of thing you are expanding on here.

With profits taken off the OR balance sheet into the group. That's if I remember correctly. I must admit my eyes were glazing over from the combined legalese, waffle and accounting setup details at that point. But I was quite tired so maybe a re-read is needed.

I can't believe any outside companies are going to invest in Openreach with the only possible reward being a better service. They'll want a demonstrable ROI for their own shareholders.

Anything written by Ofcom, not just about telecoms, is in my opinion always a contender for the worst official writing award of the year. The sort of thing most decent businesses stopped putting out decades ago. Even the several Acts of Parliament I have dug into for one reason or another over the years are easier, and dealing with much more convoluted issues.

I really think it's going to be unworkable. An inedible dogs' breakfast, even to a dog.

Edit: Surely any infrastructure investments by Openreach will become part of Openreach LoB assets, which won't belong to Openreach Limited?

Edited by RobertoS (Mon 13-Mar-17 12:17:21)

There is no mechanism for third party companies to invest directly in Openreach. What they can do is work with Openreach to produce a network. That might range from using just PIA2 to deploy its own fibre, or, possibly, a hybrid, using elements of an OR network (such as the dark fibre option for backhaul). That might mean OR investing some of the capital budget on behalf of BT Group. Possibly extending passive infrastructure or extending the fibre network.

Investing for a backhaul network for a wireless network operator might be an option too.

However, I don't find this very convincing. First, all this can be done already and it's difficult to see who is going to pour money into large-scale domestic fibre distribution networks, especially in the areas where both VM and OR operate networks. I can see it being used for limited purposes, but not some massive third network.

The other point which everybody seems to have missed is that OR is not a neutral party in all this. It seems to be obvious to me that OR will not want to see its own market share eroded by what would be networks that compete with its own FTTC, FTTP & G.FAST products. Ever since OR started operating fibre-to-the-cabinet options, it was directly competing with its own LLU customers. I suppose if OR could pick up a fat contract to manage an operate such a mass third party network it might help, but it all looks like a stretch to me.