Openreach Limited is a company wholly owned by BT Group plc, that maintains the telephone cables, ducts, cabinets and exchanges that connect nearly all homes and businesses in the United Kingdom to the national broadband and telephone network. It was established in 2006 following an agreement between BT and the UK's telecoms regulator, Ofcom, to implement certain undertakings, pursuant to the Enterprise Act 2002, to ensure that rival telecom operators have equality of access to BT's local network.
Openreach manages BT's local access network which connects customers to their local telephone exchange, starting at the main distribution frame (MDF) in the exchange and ending at the network termination point (NTP) at the end user's premises. Openreach also manages the connections between the MDF and the BT Wholesale/local-loop unbundling (LLU) termination points located in the exchange, often referred to as jumper connections.
In March 2017, after various negotiations with, and demands from, Ofcom, BT plc agreed to divest Openreach's staff and non-network assets into a legally separate company, Openreach Limited. However, the network assets would still be owned by BT plc to ensure the longevity of leases and covenants, and Openreach Limited would still be wholly owned by BT plc's parent holding company, BT Group plc.
History
Following the Telecommunications Strategic Review (TSR), in September 2005 British Telecom signed undertakings with Ofcom to create a separate division, for the purpose of providing equal access to BT’s local access network and backhaul products. Ofcom previously argued that BT had significant market power in the British telecommunications market, specifically in residential voice services, business retail services, leased lines, wholesale international services, and wholesale broadband and fixed narrowband services. The resulting organisation, Openreach, opened for business in January 2006 and reported directly to the BT chief executive.
The functional separation of Openreach from BT has had mixed results, according to economists J. Gregory Sidak and Andrew Vassallo, who have argued that while Openreach’s creation produced the short-run benefit of lower prices, it also led to long-run costs, such as declines in telecommunications investment, customer satisfaction, and measures of the United Kingdom’s global competitiveness in telecommunications.
Today, the company is structured such that it is a wholly owned subsidiary of British Telecommunications plc (BT), which itself includes the four separately managed businesses and virtually all other assets of the BT Group.
Operations
Field Telecommunications engineers install and maintain the physical network wiring from the telephone exchange into end customers' premises on behalf of 537 communication providers (CPs) which sell services directly to end customers.
Openreach engineers visit around 29,500 homes and offices every weekday on behalf of its customers, the CPs. They make 80,800 provision visits on copper, fibre and TV, and manage 90,000 repairs to its copper, fibre and broadband networks every week, remove around 40,000 unused cable connections from its exchanges and provide another 75,000 every day.
Every week they also deal with 650 network breakdowns due to damage, theft and weather, test 12,000 poles and replace 920, replace 85 cables and street cabinets, fix 100 low wires and connect another 3,000 newsite plots to its network.
Fibre rollout
In 2009, BT announced that Openreach would connect 2.5 million British homes to the higher speed FTTP network service by 2012 and 25% of the UK. In July 2010 Openreach signed an £800 million contract with ECI Telecom to help it service and create a fibre-optic network serving 18 million households in the UK. The deal was the largest in ECI's history. However, by the end of September 2015 only 250,000 homes were connected. Instead, BT offered an "FTTP on Demand" product. In 2017, Openreach proposed offering super-fast fibre broadband to 10 million homes by 2025, using fibre to the premises (FTTP) technology.