Interview The Sword of Damocles has not entirely disappeared from above Openreach. Earlier this year, the UK communications watchdog Ofcom stopped short of recommending a full decapitation of the British broadband provider from its parent BT. Crucially, though, it has kept the option on the table.
In the next few weeks the regulator is expected to either swing or sheathe its sword once and for all. That’s something Openreach head Clive Selley is eager to have over and done with.
"At the moment I think we are going through a particular change point – the Digital Communications Review is a 10-yearly event. I’d like that to be landed and behind us. I’d like the outcomes to be clear in order that we can invest in confidence in the telecommunications platform for the UK."
In the review Ofcom recommended enhanced separation from BT with greater access for competitors to its ducts and poles and greater independence of Openreach, having found that it acts too much in BT's interests rather than the market.
It claimed to have stopped short of formal separation to address the "significant failings" of the current set-up due to the property and pension costs associated with that option. Although cynics have said the regulator did not have the appetite to enter a lengthy legal battle with BT over full separation.
Openreach had privately submitted its own voluntary reform plans, but they apparently "didn't cut the mustard".
Selley says: "Aside from all these arguments about governance – what I want most is an environment that allows me to invest boldly with some confidence about getting returns. And for that I need a stable and predictable regulatory environment, not one that is thrown up in the air and could land anywhere."
So what does Selley envisage a reformed Openreach would look like? "I think Openreach needs, like any business, to evolve continuously. I would like Openreach in the future to take the UK from super fast to Ultrafast.”
Selley stands by the company’s hybrid-fibre and copper broadband technology G.Fast, as a means of enabling the country the country to achieve ultrafast speeds of 330Mbps.
That is not surprising as he previously ran the labs that developed it. By rolling out this technology over a purely fibre-to-the-premises (FTTP) approach, Openreach is clearly sweating its copper assets while also claiming to provide customers with a faster and cheaper means of accessing high speed broadband.
But for some observers – not least Ofcom – the UK looks to be lagging behind other countries. For example, Spain currently has 60 per cent of its domestic and business premises covered by FTTP deployments, while the UK has just two per cent covered by FTTP.
"But they have lower average speeds,” says Selley. “So we in what sense are we lagging behind? We have the highest average speeds of broadband across the population, as compared with Germany, France, Italy, Span and the lowest average broadband costs. So what is exactly the problem?”
What Ofcom wants is network investment, he says. “Our investment strategy is going broader. We are not a country that has a load of people excluded from a digital life and economy and it is to deliver ultrafast speeds just four years form now for 12 million homes – two million of which will be FTTP.”
Currently Openreach has 300,000 FTTP customers. “So that is quite an increase."
Nevertheless, its regulator-in-chief Sharon White has said she sees fibre as the UK’s future.
"I am sure Sharon White has an opinion on technology, yes,” said Selley. “And my plan is to deliver a lot of FTTP. Which infrastructure player has the biggest FTTP footprint in the UK? Openreach. And it is accelerating. So any suggestion that I don’t advocate FTTP as part of a platform solution in the UK would be inaccurate.”
Selley took over as Openreach boss from former head Joe Garner earlier this year. Unlike Garner, whose background is in banking, Selley comes from a purely engineering background and has for worked for BT since 1981.
The company paid for his engineering degree back in the 1980s while he worked part time at its labs. It's clear his allegiance to BT and Openreach goes back a long way, and when asked what he would change about Openreach’s historic decisions he’s loath to name many.
"I think there is a tonne of things that it can be very proud of. For example we are the biggest super-fast broadband footprint across Europe."
But what strategically would he have done differently? "With hindsight the superfast strategy was spot on. Many countries began life with an FTTP strategy that got nowhere. Look at what happened in Australia, for example. They shot off down that road, spent a lot of money on a few homes, backtracked and switched to DDSL. So we got that choice right from day one."
So does he believe, then, that Openreach has got it right at every point?
“There is always scope to do things better. I point to my strategy now of better service as the first objective. Yes we could have done more of that yesterday than today. But I think the teams were so engaged in delivering superfast broadband. It is a vast, vast programme.”
"We cover 25,000 new homes every week. So today between the time I came to work and the time I came here: 5,000 more homes were delivered. And that has consumed the organisation." ®