In what could go down as a landmark decision in the history of European telecoms regulation, Ofcom, the UK’s telecoms authority, has announced it is to adopt a much more laissez faire approach to market regulation in return for BT agreeing to completely open up its network to other operators.
As part of the settlement, BT has agreed to create a new business called Openreach, separate from BT Wholesale and BT Retail, whose job will be to ensure all other operators have transparent and equal access to the nationwide local BT network. This network covers the contentious ‘first mile’ of wire that connects homes and businesses to BT exchanges across the UK. The new venture will be up and running by January 2006.
In a press statement, the company welcomed the regulatory settlement as a “defining moment” for the industry and predicted it would usher in a “new era of investment and innovation”.
BT chairman Sir Christopher Bland said: “This is a real achievement for the whole communications industry. It will benefit consumers, businesses and the UK economy. Ofcom has 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 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.”
The launch of the new firm is likely to cost millions of pounds in re-branding costs alone. The company will consist of BT’s field force of 25,000 engineers, whose 22,000 vans are to be re-sprayed to distinguish them from the rest of the BT fleet. According to BT, they will be instantly recognisable by the bright multicoloured waves that stretch the length of each vehicle.
The new business will be led by chief executive Steve Robertson, whose appointment was confirmed 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.”
Whilst remaining an important part of BT, the new business will have its own headquarters, distinct identity and around 30,000 staff who will come primarily from BT Wholesale and BT Retail.
The business will be the second largest within BT Group by the number of employees and it will have assets of around £8bn sterling and revenues of more than £4bn sterling.
Openreach will have its performance monitored by the newly created auditing body, the Equality of Access Board. 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.
The structure of BT Northern Ireland will not be affected by the launch of the new operation.
By Brian Skelly