BT opens up Openreach and unlocks a new era of innovation in the UK

Thanks to the recent Ofcom ruling on BT and Openreach, the UK is on the brink of a new era in phone and internet usage.

Brexit isn’t the only separation happening in the United Kingdom right now. The tumultuous news of the UK leaving the European Union has almost overshadowed the announcement of another break-up taking place in the UK: BT has negotiated with Ofcom, the Government telecommunications regulator, to separate from its network business, Openreach. The market has long called for more competition in telecommunications, lower prices and better customer service—and Ofcom’s announcement is a giant step in that direction.

It took two years of negotiation—ironically the same period the UK has to negotiate its Brexit terms with the EU—but Ofcom’s ruling means that BT, the former state-run telecoms monopoly, will legally separate from its Openreach division, which owns and operates the system of cables, poles and ducts connecting UK customers to the internet and telephone network.

It’s not surprising BT held out for two years. Openreach has been lucrative for BT, generating significant profits in the 11 years since it was set up. They didn’t want to let go lightly.

Other internet providers wished they had. Openreach was meant to provide equal access to other providers like TalkTalk, Sky and Vodafone, but these providers have long argued that Openreach was skewed in favour of BT’s retail business. BT acknowledged that their customer service could have been better. And many commentators feel there has been too little investment in converting Openreach from copper to a modern all-fibre network. Only with systems like “fibre to the home”, for example, can the UK be expected to bridge the digital gap between its own urban and rural internet service.

So the separation has started. It won’t be a clean divorce: To maintain a quick and simple separation, the new Openreach will operate as a distinct company with its own management, with a legal duty to serve all its customers equally. However, it won’t be entirely independent from BT. As a result, Sky’s CEO prefaced his cautious welcome to the Ofcom announcement with a comment about it being a “pragmatic fudge”.

That aside, internet providers are cheering. TalkTalk’s chief executive said, “Ofcom has done well in identifying many of the worst problems, including recognising, finally, that BT’s control of Openreach creates a fundamental conflict of interest which hurts customers.” A Sky spokesman commented, “BT must now be held to account for improving service and enabling delivery of fibre to Britain’s homes and businesses. Ofcom’s actions…are a staging post towards delivering the network and service that Britain needs.”

The mobile comms giant Vodafone called on Ofcom to “ensure the UK gets the ultrafast fibre networks it will need to compete effectively”. It added, “We welcome the move to open up BT’s ducts and poles, which we have successfully used in other countries such as Portugal to provide customers with fibre to premises.”

Competition rises while prices fall

Make no mistake, Ofcom’s decision will make it much easier for competitors to access and use the Openreach network. A new ‘digital map’ of the UK will allow competing operators to invest in advanced networks, giving consumers more choice over how they receive their phone and broadband services. In other words, the long-anticipated competition will finally intensify, prices will fall and service standards will rise.

One of the greatest advantages will also be innovation. With services like “fibre to home”, internet providers will no longer be restricted by bandwidth—they will have the flexibility to innovate as technology evolves. They will be uniquely positioned to deliver new ultra-fast broadband services, bundle multiple services together and enable new app-based services. This ranges from online business services (similar to Vodafone’s 360 business suite), to on-demand broadcasting and Wi-Fi calling. The ideas are limitless.

The one issue that isn’t limitless is time. The telecommunications sector is characterised by its speed of change: Witness how quickly the fortunes of Samsung and Apple ebb and flow. Internet providers need to innovate better value solutions faster if they are to stay in front.

Software factory key to rapid telco innovation

So how do they build a ‘software factory’ geared to rapidly innovating, testing, securing and delivering the next-generation of telecommunications apps and services their customers are calling out for?

The first step is to plan ahead—to take action on what’s around the corner. An agile, collaborative software development platform enables teams within Internet providers to collaborate on development and connect closely to the business goal. As such, a project and portfolio management platform enables the teams to take control of the entire innovation lifecycle, deliver initiatives on schedule and make more informed strategic investments: Should investment be channelled into a new video calling service, for example, or towards a cloud-based business communications hub?

Internet providers also rely immeasurably on application programming interfaces, or APIs, to open their data and applications to partners, developers, mobile apps and cloud services. However, to make API information sharing safe, reliable and cost-effective, they need to deal with critical security, performance management and data adaptation challenges. An API management strategy helps here: Enabling developers—internal and external—to leverage APIs and connect the business securely to mobile apps and smart devices. If APIs are the gateway to new services development, API management is the rocket fuel that pushes those apps and services out to market more quickly.

Other technology factors need to be considered too: Service virtualisation, for example, enables internet providers to test their applications more quickly and effectively. And by automating the software release cycle, organisations can deploy agile apps faster, more efficiently and with fewer errors.

Thanks to this Ofcom ruling on BT and Openreach, the UK is on the brink of a new era in phone and internet usage, one synonymous with more competition, lower prices and better customer service. Internet providers need to canter, not crawl, into this new digital era. They need to foster innovation that delivers real business outcomes and balance new ideas with customer needs. It’s about building a modern business with software at the centre.


Oliver is an Account Director at CA, focusing on key Telecoms customers in the UK.…

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