BT welcomes new era of regulation

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Caption: The new division is designed to give better access to BT's rivals
Source: BBC News here


bt.com | BT welcomes new era of regulation | 22 September 2005

BT welcomed the landmark regulatory settlement announced by Ofcom today as a "defining moment" for the industry. The company predicted it would usher in a new era of investment and innovation.

The settlement, which follows Ofcom's acceptance of legally binding undertakings from BT, is based on the principle of focusing regulation only where it is needed and rolling it back elsewhere. It will deliver clarity and certainty to the whole telecommunications industry. It represents the biggest regulatory change since BT was privatised more than twenty years ago.

As part of the settlement, BT has agreed to create a new business called openreach (see accompanying news release DC05–613). This business, which will be up and running by January 2006, will ensure all service providers have transparent and equal access to the nationwide local BT network. This network covers the "first mile" of wire that connects homes and businesses to BT exchanges across the UK.

BT chairman Sir Christopher Bland welcomed the settlement: "This is a real achievement for the whole communications industry. It will benefit consumers, businesses and the UK economy. Ofcom have shown real vision, and BT looks forward to competing in this new regulatory environment".

BT chief executive Ben Verwaayen added: "This settlement is a defining moment for the industry and BT is totally committed to it. It offers a fresh start and means that companies will be able to focus entirely on their customers without being distracted by micro-regulation. It provides everyone with greater certainty and clarity. That, in turn, will release investment and innovation from which everyone will benefit."

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bt.com | BT unveils new multi-billion pound business | 22 September 2005

BT today unveiled openreach, a new multi-billion pound business that will be responsible for the nationwide local BT network.

openreach is set to become a familiar household name as it will contain BT's field force of 25,000 engineers. These engineers make more than 3.5 million home visits every year on behalf of hundreds of companies. They are the men and women who install new lines, upgrade the local network and maintain the green cabinets at the side of the road. In short, they are the people who ensure that tens of millions of people across the UK have reliable local access to telephony and internet services.

The business, as well as having a new name, will also have a dramatic new look. Its 22,000 vans are to be re-sprayed to distinguish them from the rest of the BT fleet. They will be instantly recognisable by the bright multi-coloured waves that stretch the length of each vehicle.

openreach is being created as a result of the new regulatory settlement (see release DC05-612). It will be operational from January 2006 ensuring all service providers have transparent and equal access to the local BT network. This network covers the "first mile" of wires that connects homes and business to BT exchanges across the UK.

It will be led by chief executive Steve Robertson, whose appointment was confirmed today. Whilst remaining an important part of BT, it will have its own headquarters, distinct identity and around 30,000 staff. These staff will come primarily from BT Wholesale and BT Retail.

The business will be the second largest within BT Group by number of employees and will have assets of around £8 billion and revenues of more than £4 billion. This makes it comparable in size to some FTSE 100 companies.

openreach will have its performance monitored by the newly created Equality of Access Board (EAB). This Board will monitor the delivery of the undertakings given by BT to Ofcom and so will also monitor the performance of BT Wholesale in certain areas. Carl Symon, one of BT's non-executive directors, will chair the Board which will have a majority of independent external members.

openreach chief executive Steve Robertson said: "The local BT network is one of the UK's most important assets and my role is to ensure everyone has equal access to it. My team will be responsible for ensuring tens of millions of homes and businesses have access to the wider world and to faster and more exciting services in the future. Now we have a green light we can get down to delivering a business that everyone can be proud of. There's a huge amount to be done by January but, given the progress we've already made, I am sure we will be ready."

The structure of BT Northern Ireland will not be affected.

Notes


Steve Robertson

Steve joined BT Wholesale in October 2002 as Managing Director Wholesale Operations from COLT Telecommunications. At COLT Steve was responsible for the design, deployment and operation of their pan-European infrastructure as well as product management and sales for COLT’s pan-European business as their Managing Director. Before joining COLT, Steve held a number of positions across BT including Director of Data Products and Senior Vice President Network, Systems and Operations for Concert.



openreach Facts

openreach's copper access network is 120 million kilometres long and so could stretch around the globe 3,000 times

This network covers 30 million customer lines from c.6,000 local exchanges

300 million telephone calls are made across this network every day

350 million internet connections are made across this network every day

openreach will employ around 30,000 people, 25,000 of whom are engineers

These engineers collectively climb the equivalent of Mount Everest every single day while carrying out maintenance on telegraph poles

They work down 200,000 manholes and up more than 2.5 million poles

They visit 11,000 homes and offices every day. That's 3.6m visits a year to help install new lines, make repairs, upgrade service etc

openreach will have a fleet of more than 22,000 vans

This means openreach engineers collectively travel almost three times around the circumference of the globe every single day

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Ofcom | Ofcom accepts undertakings from Board of BT Group plc on operational separation | 22|09|05


BT access services business – Openreach – formally established today

The Ofcom Board has formally accepted legally-binding undertakings from the Board of BT Group plc. The undertakings, which were offered to Ofcom in June 2005, were subject to consultation over the summer. They create a new regulatory approach to the access infrastructure operated by BT in the UK.

Separately, BT has today announced the establishment of its new access services business - Openreach.

Undertakings

In more than 230 separate undertakings, the Board of BT Group plc has agreed to substantive structural, product and governance changes, affecting both its current and future networks.

Ofcom believes the undertakings will:

1. allow all communications providers to gain real equality of access to critical BT infrastructure on fair and equal terms, encouraging investment in infrastructure and enabling innovations through multiple services and the increasing deployment of next-generation technology;

2. lead to lower prices and greater choice of products and services for consumers and businesses; and

3. help to underpin the UK’s industrial and economic competitiveness in the future.

Ofcom Chief Executive Stephen Carter said: “After a full year of detailed consultation, Ofcom has accepted BT’s commitments. The new management of Openreach and the Equality of Access Board must now deliver - and be seen to deliver.”

He added: “Ofcom is hopeful that this new approach to competition regulation will stimulate investment, innovation and sustainable growth in this critical industrial sector.”

The final undertakings can be found online at:

http://www.ofcom.org.uk/static/telecoms_review/final_statement.htm

Ends.

NOTES FOR EDITORS AND CSEs

1. Over the summer Ofcom consulted on a set of undertakings offered by the Board of BT Group plc. The undertakings accepted today are largely unchanged, but as a result of the consultation a number of changes have been made on matters of detail. The most significant changes include:

* The undertakings now make it clearer that Openreach is expected to be the primary sales channel for its own products, and that it may only sell to communications providers, not to end users. Similarly, the role of BT Wholesale has been clarified.
* The Chinese Wall provisions between Openreach and BT Group plc have been modified and now include a number of additional conditions. For example, no employee of Openreach may share customer confidential information with any other part of BT or attempt to influence commercial policy. The Chinese Walls within BT Wholesale similarly contain a number of additional conditions.
* The undertakings now make it clear that communications providers can use Openreach’s backhaul products in a number of different ways. Backhaul is the part of a telecoms network that connects local exchanges to the long distance telecoms network.
* The undertakings now make it clear that, should BT wish to develop a replacement for the Wholesale Line Rental product (which is based on access to Multiple Service Access Nodes), then Ofcom and BT should first agree what (if any) inputs to that product should be made available on an equivalent basis to other communications providers.
* In the June undertakings the provision of Partial Private Circuits was effectively split between Openreach and BT Wholesale. The undertakings now make these arrangements more practical; Openreach will manage two new products which will be available to other communications providers, and the costs attributable to these new products will form part of the costs of BT’s Partial Private Circuit product.
* The undertakings provide more detail on the basis of the preparation of Openreach’s management accounts.
2. Ofcom published Phase 1 of the Strategic Review of Telecommunications in April 2004. Phase 2 was published in November 2004. In June 2005 the Board of BT Group plc offered draft undertakings to the Board of Ofcom. The undertakings were subject to consultation over the summer and were formally accepted in September 2005.
3. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services.

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BBC News | BT unit tasked to aid competitors | Last Updated: Thursday, 22 September 2005, 06:22 GMT 07:22 UK

BT has unveiled details of a new sub-division which will work to improve the access of rival telephone firms to UK homes and businesses.

The new unit, Openreach, will operate BT's local loop, the last mile or so of cables between local exchanges and people's landline phones.

BT offered to set up the new division earlier this year as a means to avoid being broken up by regulator Ofcom.

It will have its own headquarters and logo, but remain part of the BT group.


The new management of Openreach and the Equality of Access Board must now deliver - and be seen to deliver
Ofcom chief executive Stephen Carter

The new division will employ about 30,000 people, most of them engineers moving across from other parts of BT.

Operational from January 2006, it will also report its own set of results.

Performance monitoring

"The local BT network is one of the UK's most important assets and my role is to ensure everyone has equal access to it," said Openreach chief executive Steve Robertson.

Openreach will be the second largest unit within the BT group by number of employees, and will have assets of around £8bn and revenues of more than £4bn.

It will have its performance monitored by the Equality of Access Board (EAB), which is also being newly created by BT.

As its name suggests, the EAB will study how well Openreach does improve access to BT's rivals, such as Talk Talk and Onetel.

The EAB will be chaired by one of BT's non-executive directors, Carl Symon, but will also have a majority of independent external members.

"The new management of Openreach and the Equality of Access Board must now deliver - and be seen to deliver," said Ofcom chief executive Stephen Carter.

"Ofcom is hopeful that this new approach to competition regulation will stimulate investment, innovation and sustainable growth in this critical industrial sector."

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Ofcom approves landmark BT restructuring
Graeme Wearden | ZDNet UK | September 22, 2005, 10:10 BST

BT is creating a new division called Openreach to run its local network, as part of major reforms prompted by Ofcom

Communications regulator Ofcom has accepted BT’s offer of widespread changes to the way it operates its local network and deals with its rivals. As predicted yesterday, the move spares the telco from the threat of break-up.

In an announcement on Thursday morning, Ofcom said it had accepted more than 230 separate undertakings made by BT, including the creation of a division to run its local network.

"Ofcom is hopeful that this new approach to competition regulation will stimulate investment, innovation and sustainable growth in this critical industrial sector,” said Ofcom chief executive Stephen Carter.

In a separate announcement at the same time, BT revealed that its new access services division would be called "Openreach". It will be operational by January 2006, and will have the role of giving all service providers transparent and equal access to the nationwide local BT network.

"This settlement is a defining moment for the industry and BT is totally committed to it," said BT chief executive Ben Verwaayen.

"It offers a fresh start and means that companies will be able to focus entirely on their customers without being distracted by micro-regulation. It provides everyone with greater certainty and clarity. That, in turn, will release investment and innovation from which everyone will benefit," Verwaayen added.

Ofcom's strategic review of the telecommunications market set the conditions for BT's organisational changes. In the report last November, the regulator said it was unhappy that BT wasn’t giving its retail rivals fair and equal access to its telecommunications network. At the time, Ofcom warned BT it would launch an investigation under the Enterprise Act, which could lead to the company’s closure, unless it mended its ways.

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zdnet.co.uk | Market debates BT's access divisionFriday | 23rd September 2005
Jo Best, silicon.com, September 23, 2005, 09:10 BST

Will you reap the benefits of openreach through cheaper broadband, or will it just make life more comfortable for BT's competitors?


Ben Verwaayen, chief executive of BT Group, on Thursday revealed details about the company's creation of a new services division, openreach, and the telco's successful avoidance of a break-up at the hands of regulator Ofcom.

Verwaayen stressed that the decision to create a new division was "good news" for BT and maintained that the company had jumped, rather then been pushed by Ofcom, into making the decision.

"This is a settlement — we're not going for some regulated construct where we've been dragged kicking and screaming," he said.

However, Lars Godell, principal analyst in Forrester's telecom and networks research team, said he would be surprised if that was the case. "[BT] have been masters at playing the regulatory game for many years. I'm not sure they got as good a deal as you would expect."

According to the BT boss, openreach is expected to be operational in four months time with products available to ISPs in the spring of next year. The new division will encompass BT's 25,000 engineers, whose vans will be rebranded as part of the changeover.

ISPs will also see some differences in how they deal with the telco, with a new engineering booking system and postcode database.

The whole process is expected to cost the telco around £200m, in addition to marketing and retraining costs.

Steve Robertson will head the new BT unit and will be among the execs who will receive what he called "incentives" if openreach hits its targets. While the benefits are yet to be finalised, Robertson said: "They will translate into cash — and hopefully plenty of it."

Conversely, Ofcom could also impose penalties on BT if it fails to abide by certain regulations, among them proving it is providing all other ISPs with the same processes, systems and service that it provides to itself.

BT is expected to start its discussions with ISPs on these arrangements from as early as two weeks' time.

Will the new-look BT actually make any difference to the industry on a large scale and to service providers in particular? The UK's ISPs seem to be treating the announcement with cautious optimism.

Cable and Wireless chief executive Francesco Caio said in a statement: "The undertakings that Ofcom has won and the new division BT has had to create demonstrate the effect its monopoly control of access has had in undermining competition to date. Together, they present an opportunity to drive real change but there is still a difficult journey ahead."

Meanwhile others, including Easynet, said the question of local loop unbundling would be the key test of the telco's dedication to opening up the market.

Scott Morrison, research director at analyst firm Gartner, said the reaction from ISPs was justified. "The caution comes from past experiences — things don't ever go as smoothly as they hope. The optimism comes from if it works out, it will genuinely represent an open playing field."

Forrester's Godell, however, said the changes will benefit ISPs rather than end users.

"To me, this shows that Ofcom are more interested in the welfare of ISPs than of end users. It's a constant dilemma for European regulators — do they benefit the end users or the competitors?" he added.

It's a suggestion borne out by Verwaayen himself. "At the end of the day, the cheaper part is at the behest of the service providers," he said.

There have also been suggestions that BT is grooming openreach for a spin-off. It wouldn't be first time the telecoms giant has launched a new company on the market — think mmO2 — and, although Verwaayen denied such a move would ever be seen during his tenure, industry watchers aren't ruling it out.

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Trade Marks Journal No. 6513 09 January 2004
2340861 15 August 2003 (35, 38, 42)

OPENREACH

Class 35:
Business information, advisory, research and consultancy services; business and commercial information, advisory and consultancy services; computerised database management services.

Class 38:
Telecommunications services.

Class 42:
Providing information relating to legislative and to regulatory matters; legal and regulatory information; advisory and consultancy services.

BRITISH TELECOMMUNICATIONS public limited company, 81 Newgate Street, London, EC1A 7AJ.

Agent: BT Group Legal Services, Intellectual Property Department, Holborn Centre, 8th Floor, 120 Holborn, London, EC1N 2TE.

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Reuters.com
UPDATE 1-UK's BT Group unveils new "openreach" division
Thu Sep 22, 2005 03:10 AM ET


LONDON, Sept 22 (Reuters) - Britain's BT Group Plc (BT.L: Quote, Profile, Research) on Thursday unveiled a new business division that will oversee access by rivals to its local telecoms network, making good its promise to regulator Ofcom in return for avoiding a break-up.

The former monopoly and Britain's top fixed-line telecoms company said its new "openreach" division, to be operational from January 2006, will have revenues of over 4 billion pounds ($7.2 billion) and assets of around 8 billion. It will have its own headquarters, a distinct identity and around 30,000 staff.

"This makes it comparable in size to some FTSE 100 companies," BT said in a statement.

BT's rivals had long complained that they did not get access to its local loop, the last mile of wire connecting homes and businesses with telephone exchanges, on the same terms as BT's own retail arm.

BT had agreed to set up this division as part of a deal with regulator Ofcom in exchange for lighter regulation and averting its break-up into separate retail and wholesale arms.

The new unit, led by Chief Executive Steve Robertson, will sit alongside BT's existing retail, wholesale and global services units, but will have its performance and independence monitored by a newly-created Equality of Access board.

In a separate statement Ofcom, which has been being carrying out year-long a strategic review of the UK's telecoms sector, said BT's moves would lead to lower prices and greater choice for consumers.

Ofcom said it had accepted over 230 separate undertakings from BT as part of a regulatory settlement in which the company had agreed to substantial structural, product and governance changes.

"After a full year of detailed consultation, Ofcom has accepted BT's commitments. The new management of openreach and the Equality of Access board must now deliver -- and be seen to deliver," Ofcom Chief Executive Stephen Carter said.

BT said its settlement with the regulator offered opportunity for a fresh start.

"Companies will be able to focus entirely on their customers without being distracted by micro-regulation. It provides everyone with greater certainty and clarity. That, in turn, will release investment and innovation," BT Chief Executive Ben Verwaayen said.

BT shares were unchanged at 222-1/4 pence by 0708 GMT on Wednesday, giving it a market value of around 18.8 billion pounds.

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timesonline.co.uk | September 22, 2005
BT settles with Ofcom and unveils 'openreach'
By Miles Costello, Times Online

BT has at last unveiled the full details of the multi-billion pound business it was forced to create to open up its local telephone exchanges to rivals, as the group finally reached a landmark settlement with the industry regulator, Ofcom.

*
In what BT described as its "biggest regulatory change" since it was privatised just over 20 years ago, the telecommunications giant is preparing to launch "openreach", a business charged with ensuring that BT's rivals have "transparent and equal" access to its local network of exchanges.

Opening up this network, or "unbundling the local loop", covers the first mile of wire that connects homes and businesses to BT exchanges nationwide.

During a bitter battle and a year-long review by Ofcom, competitors had complained that BT's ownership of these exchanges was restricting competition and preventing them from using the network to offer cheaper-priced alternative services to businesses and consumers.

Today's agreement, described as "a defining moment" by BT, sees the creation of a business that will have its own chief executive, Steve Robertson, the former managing director of BT's wholesale business, its own headquarters, and a staff of 30,000 - some 25,000 of those working as engineers.

Mr Robertson said today: "The local BT network is one of the UK's most important assets and my role is to ensure everyone has equal access to it. My team will be responsible for ensuring tens of millions of homes and businesses have access to the wider world and to faster and more exciting services in the future."

Openreach, which will be carefully monitored by Ofcom, will also have its own corporate brand, with its 22,000 vans carrying a set of bright, multi-coloured waves that will stretch the length of each vehicle.

As he said that openreach will be up and running as a new business by next January, Christopher Bland, BT's chairman, said: "This settlement is a defining moment for the industry and BT is totally commited to it. It offers a fresh start and means that companies will be able to focus entirely on their customers without being distracted by micro-regulation.

"That, in turn, will release investment and innovation from which everyone will benefit."

BT's competitors are expected to welcome the settlement and the structure and regulation of the new company. Today's move is the realisation of a draft agreement struck in June and the regulator today made clear it would not shy away from its role of policing openreach to ensure competition is effective.

Stephen Carter, chief executive of Ofcom, said: "After a full-year of detailed consultation, Ofcom has accepted BT's commitments. The new management of Openreach and the Equality of Access board must now deliver - and be seen to deliver. Ofcom is hopeful that this new approach to competition regulation will stimulate investment, innovation and sustainable growth in this critical industrial sector."

Openreach will be the second-largest business within the BT group in terms of staffing levels and, with assets worth about £8 billion, is set to bring in revenues of more than £1 billion.

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ft.com | BT reveals business unit forced on it by regulator
By Mark Odell, Telecoms Correspondent
Published: September 21 2005 21:38 | Last updated: September 22 2005 15:50

BT and OfcomThe public face of BT received a makeover on Thursday when the group unveiled Openreach, the branding of an operationally independent business unit it was forced to set up as part of a regulatory settlement aimed at encouraging greater competition in the telecommunications sector.

Ben Verwaayen, BT chief executive, took the wraps off the new identity of the division, which was previously known as Access Services but has now been branded Openreach. The new unit will include almost the entire company’s field engineering force and half its fleet of white vans.

The move is part of a deal with Ofcom, the combined telecoms and media watchdog, which was reached in June as part of a strategic review of the telecoms sector with the core aim of breaking BT’s stranglehold at the local exchange level. Rivals have argued that BT’s control of this economic bottleneck had stifled competition.

Ofcom confirmed on Thursday that it was closing the book on its review following a final consultation period with the industry. It differs little from the draft proposals it published in June, which were welcomed by BT’s rivals at the time.

The creation of the access services unit is designed to ensure that rivals receive the same treatment as BT’s retail business. Over the years, rivals have filed a string of complaints highlighting the preferential treatment that BT’s wholesale business had given the retail unit in the past.

One industry executive on Wednesday described the new regulatory blueprint as the “biggest sea-change in regulation in 20 years” back to the privatisation of BT in 1984. The new unit will be headed by Steve Robertson, a senior BT executive, but oversight will be ensured through the creation of a compliance board.

The board, which comes into being later this year, will have five members, including a BT non-executive who will act as chairman. BT can also appoint one other executive from just below board level. The three other directors will be independent.

Openreach will begin operating in January 2006 and will have revenues of more than £4bn, or almost a quarter of BT’s total annual sales, and assets worth around £8bn.

The move will see the size of BT’s wholesale business, which operates the network and designs new products and services for use by rivals and BT’s retail business, cut by more than half as 15,000 of its 28,000 staff move over.

As the Telecom Adjudicator reports, “right first time delivery” has gone backwards for two consecutive months. That means that one in four customers do not get a service that works on the agreed date.

Cable & Wireless, BT’s biggest competitor for fixed-line services in the UK, said there was an opportunity for real change, but Francesco Caio, chief executive, said BT’s service to its competitors remained inadequate.

“Openreach must improve dramatically on BT’s performance in consistent and reliable, right first time, delivery of local loop unbundling,” Mr Caio said.

“It is that, not the name on the vans, that customers and Ofcom will watch to see if these pledges will deliver the innovation and choice that have eluded UK consumers for too long.”

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