If you live in the UK and order a new BT phone line, from
January 2006 it won't be a BT engineer driving up in a BT van
to install it for you. And if you're a customer of one of the
many other phone companies, you won't have that slightly
disconcerting experience of finding a representative of the
incumbent doing the installation work.
Well, ultimately it will still be BT, but as from
mid-January the vans and the engineers and indeed the local
network itself will all be part of a new BT subsidiary,
It's a curious and bold creation, offered by BT to the UK
regulator, Ofcom, as a solution to competitors' fears that BT's
local loop business was too closely integrated with the rest of
BT, and that this unfairly favoured BT's business over those of
its competitors, which still rely on the incumbent to connect
So BT came up with the proposal, accepted by Ofcom, to split
off the whole of its local loop operation, from the
distribution frame in the exchanges down to the connection into
end users' premises, into Openreach.
Steve Robertson (above), CEO of Openreach, recognises he has
a challenge. Openreach has been carved out of BT Wholesale,
which at the same time — see previous pages —
is embarking on the bold 21st Century Network plan. "We're down
the bottom of the value chain looking up with great interest,
and it's all those folks who have got the smart sexy stuff to
do that are going to drive this."
But it's obvious that 21CN and all the other developments in
the industry are driving demand for new services and for
bandwidth, and Robertson's new operation will be responsible
for delivering all that to the end users, on behalf of BT and
other operators. "Openreach is a child of the broader market
dynamic" which is transforming the industry, he says.
Equivalence for operators
His first task is to provide "a level playing field" for his
customers — which are not the end users but the
operators. "As an industry we get wedded to jargon so we say
we're going to create equivalence of input systems. What the
heck does that mean? Everybody who buys products from Openreach
does so in the same way."
So when BT Retail orders connections from Openreach from an
exchange to its customers it will not get priority over, say,
Cable & Wireless. "Coming from an environment where we've
been part of a vertically integrated telco that does provide
challenges," he admits.
"Everybody gets the same provisioning systems, the same
repair systems, the same access to our engineers, and so on. It
is a big change for us. It's also a big change for all our
But one of the questions that's not clear —
probably still is not to Robertson and his colleagues at
Openreach — is how exactly the company will be driven.
It has inherited an infrastructure that includes optical fibre
into businesses and copper pairs under footpaths and streets.
Some of it is new, but much of it will need renewing at the
demand for bandwidth increases.
"The challenge that's facing us inside Openreach is that
this infrastructure needs to be fit for purpose for all those
wonderful new services," says Robertson.
"Our first priority has to be delivering service and a
foundation stone of that has to be improving the quality of our
infrastructure. What does that mean? We need to look at can we
have fibre to the cabinet or not. There are all kinds of
engineering decisions that have to be made that will generate
He recognises that this will be a challenge. "The
prioritisation of how we spend money and where things are to be
done has to be done in conjunction with our customers, with the
business. There's a lot more work we need to do in that
respect. How do we productise our services?"
Meanwhile there's an immediate priority: "We need to
minimise loss because the demand for greater and greater speeds
will be with us for a long time," says Robertson. In addition
"we need to improve reliability, we need to improve our repair
performance, we need to improve our provisioning performance,
we need to improve the way that we bond electronically with our
customers and our suppliers , and there's a lot of stuff that
needs to be done that's right at the top of the agenda."
Openreach is at the very early stages, he readily admits.
"It feels like we've come a long way, but when you look at the
future landscape we've got a huge amount of work to do."
What happens in Openreach's access network has to relate to
the core networks and to content demands and the needs of the
end users. "If that chain gets broken at a time when we're all
moving very quickly and there's lots of new stuff happening
then it can be dangerous for the industry."
Openreach will need to have privileged access to the plans
of all communications providers. "There are going to be lots of
people investing lots of money to create new businesses and we
are supplying almost all of them." They will need to trust
The company will not have a public face. "We're going to
have to work with communications providers to make sure that
every person knows that when you see an Openreach van and
there's somebody knocking on the door they know who it is.
We've got to contribute to this but I do not want Openreach to
be the name at the front of people's minds. I want people to
know they are an AOL customer, a Wanadoo customer, a Cable
& Wireless customer, a BT customer."
The demarcation question
The demarcation between Openreach's network and the networks
of BT and its competitors appears fairly clear at the moment.
"In terms of the infrastructure it's the first optical
distribution frame or the main distribution frame in the local
exchange. The ownership of all parts of the infrastructure from
there out to the end user is Openreach, including the frame
itself," says Robertson.
But it's less clear what happens as broadband advances. If
fibre moves out into the access network, with DSLAMs on the
kerb delivering many megabits to customers down just a few
metres of copper, where will the boundary be then?
"I honestly don't know the answer to that," says Robertson.
"It's a fantastic question, because clearly it's a very
difficult question to answer because I don't think there have
been any conclusions drawn about that."
Ofcom's strategic review in 2005, which led to the creation
of Openreach, "is deliberately fuzzy around that, because it's
a complex question to answer", he says. "There isn't an answer
to that yet and it's something we'll be working on with our
customers and with Ofcom and with the rest of BT. Clearly it's
And if operators decided to use WiMax, or another wireless
technology, for the local loop, would that be Openreach's?
Robertson pauses before saying: "That's an interesting
question. At the moment we are focussing very much on the
copper infrastructure and the fibre infrastructure because our
plate is full in terms of stuff to do. We've looked at this and
we don't think that it's going to be an issue for us in the
next few years."
But "in practical terms" if there were a move towards
wireless distribution, "it's almost inconceivable that anything
like that could happen without Openreach being central to it in
some way", he says.
New access technologies
"Would we own the infrastructure? I don't know. We've got
the engineering capability and the weight of engineering
presence that you would need in that sort of environment. I
think it's unlikely that anything radical in the access space
that was going to be a mass application of new access
technology wouldn't somehow touch Openreach. The question is in
what way? Do you own the asset or do you not own the asset?"
It's not an immediate problem, fortunately, but he's aware that
it might become one.
In the immediate future, Openreach is responsible for
ensuring that broadband signals get through. Sometimes that
"gets down to little things, such as the sorts of connectors
we've used historically in the network". They introduce losses,
"and there are millions of them". So "we need to be continually
looking at how we can improve the quality of the
And Openreach is going to have to develop a suite of
products to cater for a range of communications providers, from
those that want to deliver several channels of high definition
TV over 24 megabits of DSL to those that want a simple,
straightforward product. "Over time we need to be able to
differentiate service," he says.
"This is a market where differentiation and segmentation
will happen, probably in ways we haven't thought of yet. We
need to be agile, we need to be very customer connected and we
need to make sure we deliver what is needed for their
businesses. If we don't there won't be a place at the table for
Above all Robertson recognises that "we're in the middle of
a massive industrial transformation", and "we will go with that
transformation or we will be part of telecoms history", he
says. "Whether we will be part of the future or not is very
much in our own hands." GTB
See also interview with Paul Reynolds of BT
The state of the access network
What precisely is the state of the infrastructure that Steve
Robertson and his colleagues at Openreach are now responsible
The answer, according to Eric Gries of Evolved Networks, is
that probably they don't know. "When someone orders DSL,
whatever they tell you, almost 50% of the time they're
guessing," says Gries, a former Amdocs executive who has
recently taken over as CEO of Evolved.
He's not specifically talking about BT and Openreach's
access network. "The problem is universal," says Gries. But
Evolved Networks is closer to BT than to most incumbents: it
is, indeed, a spin-off from BT's own business, now set up as an
independent company to market systems to determine as
accurately as possible the state of the cables under the
Sometimes the problem is that operators aren't quite sure
where the cables run, he says. There are maps, yes, but "a
single exchange can have 240 maps associated with it", and
records aren't always scrupulously kept up to date.
It is "telcos' dirty little secret", says Gries. "The maps
are terrible." And as customers demand higher and higher
bandwidth, for applications such as IPTV, the problem will
potentially get worse.
And how do you define the access network, he asks. The
quality of cabling inside customers' homes will also be
important — but that's privately owned by the
resident. "You won't just be able to check that there's
dialtone," says Gries.
Evolved Networks is busy marketing software which digitises
information about the access network and then validates it
using a logical database. "We get 98% accuracy," he says. And
then it enables engineers to keep it up to date.
"A lot of companies just don't know what's going on in their
networks," Gries warns. GTB