BT agree to separate Openreach from their core business but what does that really mean for consumers?

An Openreach engineer applies a label to a cable.

Openreach manage the wires and fibres which most consumers rely on to provide telephone and broadband services.

After much negotiation with the communications regulator, OFCOM, BT have agreed to legally separate their infrastructure division, Openreach, from the rest of BT but what does this really mean for consumers?

What does Openreach do?

Openreach manage the wires, fibres and telephone exchange equipment which connect consumers’ telephones and broadband routers to the rest of the telephone system and the Internet. They are responsible for repairing faults, installing new services (such as telephone and broadband lines) and upgrading the network so new technologies (such as faster broadband) can be introduced.

Why the split?

If you’ve ever had a fault on your telephone line or had a new line installed, you’ll know how long this can take and if you live in a rural location, you’ll probably know how poor broadband speeds can be. Although this is Openreach’s responsibility, OFCOM had concerns that, as Openreach couldn’t set it own budget as it was part of BT, it wasn’t getting enough money to manage and upgrade the infrastructure properly, choosing to spend the money on TV services instead (such as buying the rights to football games).

Another issue is that even though customers have a large choice of who bills them for their telephone and broadband services, most get their services via Openreach managed cables. As BT provide services as well as managed Openreach, many of the other telephone companies complained that BT was ordering Openreach to give priority to it’s customers, something that they were forbidden to do.

Will this really improve things for consumers?

The simple reason is that no-one really knows. It is hoped that as Openreach will be able to set it’s own charges for using the network, it’ll be able to have more money to improve services; previously, BT would charge the telephone companies for using the Openreach network but only gave some of that income back to Openreach. As a separate company, with a separate board, Openreach will have to pay more in administration costs, management salaries, etc. but it should now be able to set it’s own priorities.

What will the OpenReach separation mean for customers?

You may have heard that the telecoms regulator, OFCOM, have called for BT OpenReach to be separated from the rest of the BT group of companies due to concerns about fairness and quality of service. But what does this really mean for customers and will is help keep bills lower?

Who are BT OpenReach?

BT, formerly British Telecom, is a group of companies which provide telecoms, research and development and Internet services to clients around the globe, but they are best known to British consumers as a telephone company (which in truth, is just a tiny part of what they do). One of those companies is BT OpenReach who are tasked with managing the infrastructure (wiring, exchanges, street cabinets and telegraph poles) as well as installing new lines when needed and upgrading it as new technologies come along (such as fibre-optic broadband) and fixing faults.

 

Why have OpenReach been asked to split from the rest of BT?

There are two main reasons why OFCOM have been asked to split.

The first is that, regardless of who you get your broadband or landline services from (with the exception of Virgin and Kingston Communications) your services travel over the infrastructure managed BT OpenReach. To prevent BT OpenReach from giving their own telephone and Internet customers priority, OpenReach is supposed to treat all faults and installation requests with equal priority, but there many been many complains that this hasn’t been happening.

The second issue is that OFCOM are concerned that BT have not been funding OpenReach properly, taking money from line rental sales and installation charges and spending it on buying sports events for their TV services. Customer service satisfaction levels are considered to be well below what OFCOM consider to be reasonable which they feel is an indicator that OpenReach has not been properly funded.

 

How will the split change things?

OFCOM have told BT that OpenReach must now been an independent company within BT, with it’s own board of directors and ability to manage it’s own money. It’s hoped that this will mean that it will be able to fund it’s self properly, improving customer service quality and allowing it to accelerate the roll-out of new, faster broadband technologies.

Some people in the industry had called for OpenReach to be completely split from the BT group, but OFCOM felt that this wasn’t necessary at the moment.

 

What will this mean for customers?

Unfortunately, that’s not an easy question to answer. Although it’s hoped that bill prices will fall, customer service improve and broadband speed improve, but it’s too early to say for sure.

Are free broadband deals too good to be true?

A very common question we’re asked at the Bills Club is “Supplier X is offering a year’s broadband for free. What is the catch?”, which is an excellent question. Why would any company give something away for free when the whole point of a company is to make money?

So what’s going on? Why is a year’s broadband being given away? What’s the catch?

Well, yes, there is a catch and a catch which means they’ll make more money from you than if you paid for your broadband. As with any free service deal, the devil is in the small print, and in the case of the free broadband deals there are a few points where they make their money back:

  1. You must switch your phone line rental to them – Check the price of the line rental in the “free” deals, it is often much higher than other suppliers.
  2. You must switch your phone calls to them – Again, like the line rental, the price of calls can be much higher than what you would pay from other suppliers.
  3. High call set-up costs – When you make a call, as soon as someone answers, you are charged a call set-up charge which, again, if often very high in these deals.
  4. Minimum term contract – You’ll usually be asked to sign a minimum term contract, which is usually a sign of poor value.
  5. Non-fibre only – These deals are often non-fibre optic broadband only. If you’re a low broadband user then that may suit your needs but if you have children or enjoy streaming video or music then fibre optic may be more appealing and you could find yourself stuck under contract on a slow connection while the price of fibre optic falls.
  6. No or poor quality router – Make sure your agreement supplies a good quality router, if one is supplied at all!
  7. Penalty charges – As with any agreement, make sure you check the terms and conditions for any exit charges.

So, with any “Free” deal, be very careful and check all the terms and conditions as they can end up costing you far more than paying for the service. And, of course, don’t forget that you can contact us at the Bills Club for a free and impartial view.

A new look for the Essex Bills Club web site

With the continued growth of the Essex Bills Club, we have had to move to a new web site system as keeping the old site updated had become too cumbersome. The site will be updated over the next few days, while we move the old content over to the new site but, rest assured, we won’t be leaving any of our good content out!

What do you think of the new-look site? We’d love to hear your thoughts and now you can do that by signing up to the site and commenting on any content you find interesting.