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Openreach: FCS Call For Inclusive Governance Structure

C Pateman FCS

Upon the news regarding Ofcom’s decision to legally separate Openreach and BT last week, Chris Pateman, CEO of the FCS, details below that whilst the decision is a broad step in the right direction there is still work to be done to get an Openreach which works for the whole industry.

Pateman stated, “There’s been huge progress since Clive Selley came in, and I think even the Ethernet guys are starting to see improvements now. It’s just a question of who is guiding those steps. And how much faster they might be taken were they not held back by having to drag through the leaden slough of BT corporatethink.

BT have agreed to TUPE 32,000 employees across to Openreach in the fullness of time, subject only to the delays necessitated by secondary legislation to ensure the Crown Guarantee underwriting the BT pension fund can be TUPE’d along with them. This is interesting, since one of Ofcom’s main objections to forcing full structural separation was around the risks to the pension scheme.

We remain convinced that – as both Ofcom and the DCMS Select Committee independently concluded — the only sustainable and truly customer-responsive Openreach is an Openreach which is fully master of its own destiny, structured and managed as a utility company and completely structurally separate from BT.

Nonetheless, we are where we are. Industry needs pragmatic solutions to pressing issues. And we’re glad CPs and Openreach are not, now, facing a lengthy period of procrastination while BT, Ofcom and the EU argue about the fine detail of what is needed.

There are no industry stakeholders among the non-executives on the new Openreach Board. But, to BT’s credit, there are no former BT employees either. It is a Board in the operational sense of having responsibility for the management of Openreach’s business. This is a good thing, and it gives us hope that quality of service and the value of Openreach’s engineering workforce will be properly emphasised in the years to come. But it is not a Board in the sense of being able to raise money from anybody but BT, and on terms which BT alone will dictate. This we regard as a systematic weakness in the Board’s ability to truly plan and behave like the long-term, steady pay- back player the industry needs. We wish them luck.

FCS believes as an industry we need to ensure that the newly constituted Board reflects the desire and aspiration of all Openreach stakeholders and customers. We therefore call open Openreach, Ofcom and Government to take the next step to create a truly inclusive governance structure and arrangements to allow all Industry stakeholder constituencies to be part of an inclusive and equitable investment decision making process. FCS is ready to play our part in this proposed governance structure to ensure the development of effective competition and quality networks for the benefit of all customers and stakeholders.