Monitoring of compliance with the new governance arrangements relating to Openreach

Cyhoeddwyd: 27 Mehefin 2023
Diweddarwyd diwethaf: 27 Mehefin 2023

Ar agor

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British Telecommunications Plc (“BT”) and Openreach Limited (“Openreach”)

Achos wedi’i agor

13 Gorffennaf 2017

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On 10 March 2017, BT notified Ofcom of voluntary commitments to further reform Openreach. This means that Openreach will be a distinct company with its own staff, management, purpose and strategy. The commitments are designed to address the competition concerns identified by Ofcom in its Strategic Review of Digital Communications.

The focus of this programme is to monitor the implementation of the new model, BT and Openreach’s compliance with the governance arrangements and whether Openreach acts independently and treats its customers equally. Additionally we will assess whether the arrangements deliver positive outcomes for consumers and businesses.

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Section 89C of the Communications Act 2003

We have today published the Openreach Monitoring Unit’s (OMU) annual monitoring report (PDF, 374.0 KB). This report sets out how through the work of the OMU, we ensure Openreach meets our expectations for how it deals with both its customers and its competitors.

As set out in our previous report, we expanded the scope of the OMU to include issues relating to the Wholesale Fixed Telecoms Market Review (WFTMR) framework. Therefore, as well as the OMU’s usual monitoring of whether Openreach continues to operate with greater strategic independence from BT, as required by the Commitments, the OMU has focussed on scrutinising Openreach’s activities and ensuring that they meet the regulatory requirements and expectations we imposed upon it in the WFTMR.

We have continued to see evidence that the Commitments are well-established and well-embedded across BT and Openreach. However, we have highlighted the challenge to both Openreach and BT to ensure that there is no complacency and that the Commitments remain operationally, culturally and sustainably embedded within both Openreach and BT, and the importance of compliant behaviour being driven by example from the very top – by key senior leaders.

We recognise we are in a key period for fibre investment, with alternative network operators and Openreach investing significantly on the basis of the rules we put in place in the WFTMR. It remains more important than ever to ensure that the OMU scrutinises these matters to ensure that Openreach is meeting both the letter and the spirit of its obligations.

Today’s report sets out how the OMU through its own-initiative monitoring, and concerns raised by industry, considers whether actions or decisions by Openreach risked distorting competition and harming the market. In this reporting period we have not found sufficient evidence to open any investigations in relation to these complaints, but we will not hesitate to prioritise enforcement action and hold BT and Openreach to account when necessary.

Over the next monitoring period, we would like to scale up our engagement and strengthen our dialogue with industry. We encourage stakeholders to bring any issues or concerns to our attention in real time so that these can be proactively addressed. Please contact the OMU via email: OMU@ofcom.org.uk

We have today published an open letter to industry (PDF, 161.5 KB) setting out a summary of Ofcom’s recent work in respect of concerns that have been raised with us regarding Openreach’s fibre build.

We will publish the next monitoring report in Spring 2023.

We have today published the Openreach Monitoring Unit’s annual monitoring report (PDF, 402.8 KB). This report sets out our findings since the previous report and also explains that we are expanding the scope of the OMU.

We set up our Openreach Monitoring Unit (OMU) to monitor whether BT and Openreach are acting in accordance with the Commitments. We continue to find that Openreach has operated in a way that is operationally and strategically independent from BT, as envisioned by the Commitments. Our monitoring of the Commitments is an extremely important part of Ofcom’s work and will continue to monitor and report on the Commitments moving forward.

Outside of the Commitments, in March this year, Ofcom published the Wholesale Telecoms Fixed Market Review (WFTMR). The WFTMR put in place new rules around the regulation of the fixed telecoms markets that underpin broadband, mobile and business connections, for the period from April 2021 to March 2026. These rules are designed to promote competition and investment in gigabit-capable networks – bringing faster, better broadband to people across the UK. The framework set out in the WFTMR aims to incentivise all network builders, including Openreach, to roll out new networks.

The Commitments and the WTFMR are two distinct frameworks which form part of Ofcom’s broader strategy to deliver better broadband to homes and businesses across the UK. Openreach has an important role to play in ensuring that competition operates effectively. Going forward therefore, in addition to our continued monitoring of Openreach and BT’s compliance with the Commitments, we will expand the scope of the Openreach Monitoring Unit to include issues relating to the WTMFR.

In order to support our monitoring, we encourage our stakeholders to contact us where they are concerned that there are issues that might act as obstacles to the development of competition in gigabit-capable networks in line with the WFTMR. We remain ready to use the tools at our disposal to support the policy set by the WFTMR, including through Ofcom’s enforcement function where appropriate.

Later this year, the Openreach Monitoring Unit (OMU) will publish its annual monitoring report. We are inviting people and businesses to share their views on interactions they have had with Openreach since 1 April 2020, as well as their views on the relationship between BT and Openreach, in the context of the Commitments. This includes interactions with Openreach Northern Ireland.

As in previous years, our report will look at how well BT and Openreach are doing at adhering to the Commitments and associated Governance Protocols and ensuring Openreach’s strategic independence. We will consider, in particular, how BT and Openreach are working together to support the ongoing rollout of Openreach’s fibre network and how well Openreach is doing in providing access to its physical infrastructure so that other companies can build their own networks. As part of this, we will look at how Openreach engages with its customers, working together to build positive outcomes for consumers.

If you would like to provide the OMU with a written submission, please send this to omu@ofcom.org.uk by 5:00pm on 2 August 2021. If you would prefer to discuss your views, please contact us via the same OMU mailbox by 5:00pm on 2 August 2021 and we will get in touch to arrange a discussion.

Where appropriate, the OMU may use the information provided as part of our published report. If you consider any information you provide to be confidential, please clearly mark this as part of your submission.

Areas of interest

In line with the areas outlined above, we have included some topics on which we welcome stakeholder’s views. Please provide specific examples in support of your comments where possible:

Openreach’s independence, including:

  • Whether Openreach is acting sufficiently independently of BT, for example in setting its strategic and financial priorities; and
  • The extent to which Openreach ensures that the priorities of all of its customers are built into its own strategy and plans.

Openreach’s approach to rolling out faster fibre and providing access to its own physical infrastructure, including:

  • Openreach’s approach to the development of its fibre footprint and the degree of transparency around its fibre plans;
  • Openreach’s approach to providing access to its physical infrastructure, including any positive or challenging experiences customers might have had.

Openreach’s engagement with its customers, including:

  • Openreach’s approach to engaging with its customers, for example through the Statement of Requirement or Customer Consultation processes;
  • How well Openreach is engaging with its customers around fibre pricing and terms;
  • Whether Openreach is fulfilling its commitment to treat all customers equally;
  • Openreach’s approach to handling confidential or commercially sensitive information; and
  • How well Openreach has responded to queries, complaints or concerns you may have raised.

This is not an exhaustive list and we welcome further information relating to engagement with Openreach and BT in the context of the Commitments and associated Governance Protocols.

The information provided will be used to inform the OMU’s broader monitoring aims rather than resolve individual issues.

On November 19 2020, we published the Openreach Monitoring Unit's Annual Monitoring Report (PDF, 466.6 KB). This report covers the period 1 April 2019 to 31 March 2020 and it explores how the arrangements between BT and Openreach are working in practice.Our report found that overall BT and Openreach continue to make good progress in strengthening and safeguarding Openreach’s strategic independence. But, as the report sets out, there is no room for complacency and continued focus and vigilance is necessary to ensure progress continues, is fully embedded and sustainable. We will continue to engage closely with BT, Openreach and industry to assess further progress and monitor how the arrangements are working in practice.

This summer, the Openreach Monitoring Unit (OMU) will publish its second annual monitoring report on how the arrangements to establish Openreach as a legally separate part of the BT Group are working. The monitoring report will look at how the two organisations are operating under the Commitments and associated Governance Protocols.

In preparation for this report, we are inviting people and businesses to share their views on interactions they have had with BT and Openreach since 1 April 2019, in the context of the Commitments. This includes interactions with Openreach Northern Ireland.

Our report will focus on the extent of Openreach’s independence from BT Group, its engagement with its customers and how it supports rollout of faster fibre networks. While we particularly welcome views on these areas, we also invite people to provide any other relevant information or comments they think will be useful for our annual monitoring report.

If you would like to provide the OMU with a written submission, please send this to omu@ofcom.org.uk by Wednesday 18 March.

If you would prefer a meeting or phone call to discuss your views, please contact us via the same OMU mailbox by 5:00pm on Wednesday 4 March and we will get in touch to arrange this.

Where appropriate, the OMU may use the information provided as part of our published report. If you consider any information you provide to be confidential, please clearly mark this as part of the submission.

Areas of Focus

We would particularly welcome stakeholder’s views on the following areas. Please provide specific examples in support of your comments where possible:

Openreach’s independence, including:

  • Whether Openreach is acting sufficiently independently of BT, for example in setting its strategic and financial priorities; and
  • The extent to which Openreach takes account of its customer's ambitions when developing its plans.

Openreach’s engagement with its customers, including:

  • Openreach’s approach to engaging with its customers, for example through the Statement of Requirement or Customer Consultation processes;
  • Whether Openreach is fulfilling its commitment to treat customers equally;
  • Openreach’s approach to handling confidential or commercially sensitive information; and
  • Openreach’s responsiveness to queries, complaints or concerns you may have raised.

Openreach’s support of rolling out faster fibre networks, including:

  • Openreach’s approach to the development of its fibre footprint;
  • Openreach’s transparency about its fibre build plans;
  • The extent to which Openreach is enabling the deployment of fibre networks by other providers;
  • Openreach’s implementation of its Physical Infrastructure Access (PIA) product since 1 April 2019 and/or your experiences of interacting with Openreach to access ducts and poles; and
  • Whether Openreach responds positively to opportunities for collaboration and co-investment.

This is not an exhaustive list and we welcome further information relating to engagement with Openreach and BT in the context of the Commitments and associated Governance Protocols.

The information provided will be used to inform the OMU’s broader monitoring aims rather than resolve individual issues.

We have today published the Openreach Monitoring Unit's Annual Monitoring Report (PDF, 570.9 KB) on work to deliver a more independent Openreach. This is our third report, following on from our June 2018 implementation and November 2018 interim monitoring reports. This report explores how the new arrangements between BT and Openreach are working in practice. As set out in our 2018 statement on the commitments made by BT, we will from now publish our monitoring report on an annual basis. The next monitoring report is scheduled to be published in June 2020.

Today's report finds that real progress has been made implementing the new arrangements, but there is more to be done. It will take time for the changes to be fully realised and continued commitment from Openreach and BT is essential to ensure the success of the new arrangements. We will continue to engage closely with BT, Openreach and industry to assess further progress and monitor how the arrangements are working in practice. We intend to publish annual monitoring reports going forward and the work of the OMU will feed into wider Ofcom work to assess whether the new arrangements are delivering the right results for businesses and consumers.

The Openreach Monitoring Unit (OMU) will publish its first annual compliance report on the new arrangements between BT and Openreach under the Commitments and associated Governance Protocols this summer.

To inform this report, we are inviting stakeholders to provide feedback on their experiences of interacting with BT and Openreach since April 2018, in the context of the new Commitments. This includes their experiences of interacting with Openreach Northern Ireland, which provides Openreach products in Northern Ireland.

In particular, we are interested in hearing views on Openreach’s independence and how it engages with its customers, as set out in further detail below. We also welcome any other relevant information or comments that stakeholders wish to provide.

If you would like to provide the OMU with a written submission, please send this to the OMU mailbox (omu@ofcom.org.uk), no later than 2 April 2019.

Where appropriate, the OMU may use the information provided as part of its published report. If you consider any information you provide to be confidential, please clearly mark this as part of the submission.

Areas of Focus

This first annual compliance report will be focused on two themes, on which we particularly welcome stakeholder views, namely:

Openreach independence

  • Whether Openreach is acting with greater independence from BT;
  • How Openreach protects confidential and customer confidential information; and
  • The extent to which Openreach takes account of its customers views and requirements when developing its plans.

Openreach’s engagement with its customers

  • Openreach’s approach to treating all its customers equally;
  • The way in which Openreach engages with its customers;
  • The regularity and effectiveness of senior engagement with Openreach customers;
  • The responsiveness of Openreach to your queries or concerns, including how Openreach has dealt with any complaints or concerns raised;
  • How Openreach has managed consultations, and the extent to which you felt your views were heard;
  • Experiences of the Statement of Requirements process (if relevant to you); and
  • The extent you consider Openreach to be open to investment proposals from its customers.

This is not an exhaustive list and we welcome further information relating to engagement with Openreach and BT in the context of the Commitments and associated Governance Protocols.

The information provided will be used to inform the OMU’s broader monitoring aims rather than resolve individual issues.

Where possible, please provide specific examples in support of your comments.

We have today published the Openreach Monitoring Unit’s Interim Monitoring Update (PDF, 948.1 KB) on work to deliver a more independent Openreach. This provides an update on further developments since our June 2018 implementation report and how the new arrangements between BT and Openreach are working in practice.

Today's report finds that we remain broadly satisfied with progress, although we recognise the changes will need some time to fully bed in and continued commitment from Openreach and BT is crucial to ensure the new arrangements are a success. We will continue to engage closely with BT, Openreach and industry to assess further progress through the remainder of the year. In June 2019 we intend to publish a full compliance report covering the period April 2018 to March 2019. The work of the OMU will also feed into wider Ofcom work to assess whether the new arrangements are delivering the right results for businesses and consumers.

On 1 October 2018 BT notified Ofcom (PDF, 469.9 KB) that having completed the transfer of staff from BT to Openreach, all of the preconditions set out in its March 2017 Notification had been either satisfied or waived. In accordance with our July 2017 decision (PDF, 958.4 KB) we were therefore in a position to release BT from the 2005 Undertakings 30 days after receiving BT’s notification. Consequently, Ofcom has today formally released BT from the 2005 Undertakings (PDF, 121.7 KB).

In March 2017 BT notified us of voluntary commitments to further reform Openreach resulting in Openreach becoming a distinct company, Openreach Limited, with its own Board, staff, management and strategy. Today BT formally notified Ofcom (PDF, 469.9 KB) that the preconditions set out in its March 2017 Notification have been either satisfied or waived.

As such we are now in a position to implement our July 2017 decision (PDF, 958.4 KB) to release BT from the 2005 Undertakings 30 days after receiving BT’s notification. We will provide a further update on 31 October 2018 when we intend to issue the formal notice of release of the 2005 Undertakings.

We have published our Implementation Report (PDF, 349.2 KB), which outlines the key steps taken by BT and Openreach to implement the new arrangements, alongside our observations and external stakeholder feedback. Today’s report finds that, while progress towards legal separation has been broadly satisfactory, with many of the governance changes now implemented, some remaining steps have yet to be completed.

Press release: Ofcom reports on more independent Openreach

The OMU is preparing to publish the first of its reports on the new arrangements between BT and Openreach under the Commitments and associated Governance Protocols. This report will focus on the steps BT and Openreach have taken to date to implement the Commitments, along with any behavioural changes seen through the OMU’s monitoring work. It will also describe how other stakeholders in the industry, including customers of BT and Openreach, view the new arrangements.

As such we invite stakeholders to share with the OMU its experiences of interacting with BT and Openreach (both positive and negative) since March 2017 in relation to areas falling under the scope of the Commitments. This includes stakeholder experiences of interacting with BT’s Northern Ireland Networks division (BTNIN), which provides Openreach products in Northern Ireland. In particular, we would be interested in hearing stakeholders’ views on the areas and themes set out below, although information or comments relating to issues not covered below will of course be considered.

If you would like to provide the OMU with a written submission, please send this to the OMU mailbox (omu@ofcom.org.uk), no later than Friday 16 February 2018.

Where appropriate, the OMU may use the information provided as part of its published report. If you consider any information you provide to be confidential, please clearly mark this as part of the submission.

Areas of Focus

The Implementation Report will focus on some broad themes covered by the Commitments. In particular we will be focussed on greater independence for Openreach and the equal treatment of customers, so we would welcome a submission on those themes. Where possible, please provide specific examples in support of your comments. Below are some more focussed areas which we invite you to submit your experiences of, and whether those experiences have changed since BT’s notification of the Commitments in March 2017:

General engagement with Openreach

  • The regularity and effectiveness of senior engagement between your company and Openreach.
  • The responsiveness of Openreach to your queries.
  • Any complaints you have raised with Openreach and how these have been dealt with.

Consultations and the consultation process

  • Your thoughts on the new consultation process currently being developed by Openreach and the extent to which you consider you have been given the opportunity to participate in these changes.
  • Any feedback on Openreach’s recent consultations (for example FTTP, Long-Reach VDSL or OSA Filter Connect), including how Openreach has run these consultations and your ability to make your views heard.

Investments

  • If, in the last year, you have submitted to or discussed with Openreach any investment proposals please provide your feedback on the engagement with Openreach during this process. We would also be interested to know whether you felt that any strategic decisions related to the investment proposals were being taken by Openreach, independently of BT influence. If not, please let us know why and, if possible, provide evidence of this.

These areas should not be considered as an exhaustive list and we would encourage you to provide comments about other aspects of your engagement with Openreach and BT which relate to the Commitments and associated Governance Protocols. Copies of BT’s Commitments and the associated Governance Protocols can be found at BT’s website.

The OMU is responsible for monitoring the separation of BT and Openreach and their compliance with the Commitments and associated Governance Protocols. As such, the OMU will not be reporting or commenting on specific performance metrics, nor will it discuss Openreach service delivery at the individual circuit level.

Background

In March 2017, BT notified Ofcom of its voluntary commitments to further reform Openreach, making it a distinct company with its own staff, management, purpose and strategy. We set out our view that the new arrangements sufficiently address Ofcom’s competition concerns as set out in our Strategic Review of Digital Communications (PDF, 1.1 MB) subject to BT and Openreach’s continued commitment to the new arrangement.

Ofcom published a statement in July 2017 confirming our decision to release BT from its existing undertakings (PDF, 958.4 KB) once the new commitments are in place. We also explained how we will measure compliance with the new arrangements and assess whether they deliver positive outcomes for consumers and businesses.

The Openreach Monitoring Unit

Ofcom has established the Openreach Monitoring Unit (OMU) to oversee the new arrangements.

The OMU will assess whether the new rules are being observed and will focus on three key areas:

  • implementation of the new arrangements;
  • compliance with the commitments and new rules; and
  • whether the arrangements provide Openreach with the level of independence necessary for it to make its own strategic decisions, and whether it is treating all of its customers equally.

The OMU will gather feedback from Openreach customers and other stakeholders on how the new arrangements are working. Details on how to get in touch with the OMU can be found below. The OMU will also work closely with Openreach and BT to gather and review relevant information. This will help to assess compliance with the new commitments and evaluate whether Openreach is acting independently of BT and in the interests of all its customers. We will also closely monitor how BT meets its commitment to deliver benefits in Northern Ireland, where Openreach does not operate.

In the first half of the 2018/19 financial year the OMU intends to publish a report on the steps taken by BT and Openreach to implement the new arrangements. An initial monitoring report will be published six months later, which will focus on BT Group and Openreach’s compliance with the commitments. Monitoring reports will subsequently be published on an annual basis. The work of the OMU will also feed into wider Ofcom work to assess whether the new arrangements are delivering the right results for businesses and consumers.

Interaction with other Ofcom duties

The new arrangements do not replace existing regulation of BT. Ofcom will continue to carry out other policy and enforcement activity in accordance with normal procedures.

The OMU will not get involved in individual issues arising between consumers and BT or Openreach. And while we are keen to hear from stakeholders about related issues they may be facing, the OMU intends to use this information to inform its broader monitoring and reporting strategy rather than to resolve individual issues. Regulatory disputes between parties should be brought to Ofcom where appropriate under the existing process (PDF, 276.7 KB).

How do I get in touch with the OMU?

If stakeholders have concerns about specific aspects of the service they have been provided, they should continue to contact BT or Openreach in the first instance. However, we would be keen to hear from stakeholders if they have comments about Openreach’s compliance with the commitments.

If you want to get in touch with the OMU, please email OMU@ofcom.org.uk


Cyswllt

Enforcement team (enforcement@ofcom.org.uk)

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CW/01206/09/17

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