This week’s report by industry regulator Ofcom concludes that BT will retain control over the Openreach operation, but with changes to permit more competition. We examine the arguments for complete spin off of Openreach
This is a more modest proposal than that offered by a cross-party parliamentary group which was very much in favour of splitting off Openreach to counteract what it described as BT’s monopolistic features.
In the analysis by Paul Hinks published in LWD recently., Paul concluded that if Openreach is split off from BT, and starts to either compete with rivals, or offer technologies that align with specific customer/partner needs, then really we may just have new different challenges around agreed technology standards and regulation.
BT agreed, but I found its response unconvincing. It repeated the message of the necessity for the business to have the backing of its own its powerful resources. There is something rather chilling in its protectionist tone
A Personal View
Paul sets out the strategic issues, but I would like to offer a more personal view. The BT model reminds me of the Network Rail situation. Ideologically appealing as a way of improving the sluggishness of the predecessor, the nationalized British Rail. Rail users remain unimpressed by the new system with its complex regulatory mechanisms and lack of adequate coherence ‘joined upness’ of to help customers make valuable choices.
Living with Dynosaurs
My personal experiences of both dinosaurs have mostly been frustrating. A few years ago I was locked into an apparently irresolvable four party struggle between myself, Openreach, my ISP and BT to reconnect me to the Internet. By far the most customer friendly was the ISP. I was left with the distinct impression that Open Reach would be better able to deal with me if I switched to BT and its then developing broadband system.
It took six weeks to sort it out.
Discussions on twitter (thanks to access from my local library) revealed that I was far from alone in my dissatisfaction in particular with BT itself.
It may or may not be relevant to conflate this experience with my sense that the BT huge venture to inject competition into televised sport is not resulting in a better consumer service.
I await change, bur remain less than optimistic about the leadership of BT in the vital challenges of achieving a Great Leap Forward in the necessary information highways of Great Britain.
Is it Overreach with Openreach?
Regular LWD contributor Susan Moger, Senior Fellow in Leadership,at the Alliance Manchester Business School, suggests that Openreach may risk Overreach. She notes:
What strikes me is that in managing all these ‘moving parts’ BT is struggling to cope with the changing nature of its customer base and that of a modern organisation, which BT’s Openreach is.
A good Quality high speed broadband service is a MUST for everyone now, not a luxury. In its advertising, BT has raised its customers’ expectations enormously, and is now struggling to meet them, for whatever reason.
There also appears to be an intention to manage the Openreach business in the same manner as the ‘BT in the days of copper’ ie as a command and control organisation, and this may not be appropriate.
Openreach may be a separate organisation. However, given the massive investment made BT in sports broadcasting. there is still a possibility that BT is hoping that there might be a ‘contribution’ from Openreach at some stage. In any event, underperformance and overtly bad performance by Openreach can’t help the BT brand.
Meanwhile, Ofcom’s new director Sharon White signals that BT is still under scrutiny, although there are voices suggesting the proposals need to be clearer with more specific and measurable outcomes.