The Chairman of Openreach plans to make Ofcom’s monitoring of the legal separation between the infrastructure provider and parent BT a “non-issue” as he looks to create a more independent company.
But Mike McTighe also says that increasing wholesale prices and finding a way to retire the company’s copper network are key to ensure a workable business case for FTTH.
The Chairman, a former Ofcom board member for over eight years, has been in position at Openreach since January as part of an ongoing shake up that sees BT revert to the role of a shareholder.
Alongside the setting up an independent board of directors and forcing Openreach to consult with its biggest customers and critics, the UK regulator set up a monitoring team to ensure the separation goes to plan.
Ofcom said it would become clear whether within three years whether the legal separation was working but McTighe hopes to make it largely redundant from the start.
“I’m going to make [the monitoring] a non-issue,” he tells European Communications at this week’s Broadband World Forum in Berlin.
“If they have to monitor us then shame on us. I’m not being complacent, we are going to do the right thing.
“Ofcom know this, I’ve been very clear with them… they can monitor whatever they want, I don’t care.”
Openreach’s critics, of which there are many, will say the proof of the pudding will be in the eating but McTighe makes a largely compelling case that things will be different from now on.
He says the changes Openreach is making are “absolutely necessary” and give the company “the opportunity to rebase the relationship with stakeholders”.
He opens up on two of these stakeholders in particular – customers and employees.
A “clear sense of purpose” means Openreach can now have “very different conversations” with customers, according to McTighe.
“I can quite openly have a confidential conversation with Sky or Vodafone which is starting to drive a different dialogue...a much more traditional supplier-customer relationship where you can come up with products and services that are more aligned,” the Chairman says.
The large service provider customers, which also include TalkTalk, are desperate for Openreach to invest in more pure fibre technology.
The company has connected over 300,000 premises to FTTH and plans to reach two million by 2020.
Openreach CEO Clive Selley said in July that 10 million UK premises could access pure fibre technology by the mid-2020s if “the right conditions” prevail.
McTighe says Openreach is “committed” to building such a network but adds: “We cant do it on our own.
“We need conditions put in place by stakeholders to enable us to come up with the economic justification.
“We need to be in a position where we can put a compelling business case to our shareholders.”
Inconveniently, this means BT, but leaving this aside the Chairman says there a number of things that need to change.
He picks out two in particular – the need to retire the company’s existing copper network so that it’s not paying for two sets of infrastructure and an increase in wholesale rates.
Neither will be easy.
Another area that has garnered media speculation of late is co-investment, whereby Openreach joins forces with a Vodafone or a Sky, for example, to build a network together.
But McTighe is sceptical.
“We will do some of it to demonstrate a new way of working [but] it will be tactical,” says.
By way of explanation he adds: "What’s in it for a co-investor if it’s immediately offered to everybody else? The answer is nothing.”
A “more interesting” proposition is getting certainty from customers on adoption rates, the Chairman says.
This would entail a “different commercial model” whereby customers buy a certain number of ports and guarantee demand.
McTighe says its FTTH consultation is designed “to flush all this out and assess industry appetite to support us”.
The consultation closed last month and anonymised results will be published in the next few weeks.
The Chairman is least excited by the prospect of customers getting more access to Openreach’s infrastructure in order to build their own networks.
“I’d rather they didn’t because I’m trying to preserve a business for Openreach,” he says.
Rather, McTighe wants Openreach to return to serving the purpose it was originally set up with – creating competition at the retail level.
With some 580 customers today, the Chairman adds: “I think we can be a model for the rest of the world.”
Beyond working with customers, McTighe is aware he has work to do on changing the culture at Openreach.
“Openreach was somewhat passive, it had been beaten up a lot,” he says of his first impressions on joining the business.
“In many instances it’s about liberating people. I think many people have felt constrained by previous structure.
“Clive [Selley] has been very clear about our three priorities – service, coverage, speed. It’s about the independence we now have, not some dead hand somewhere that’s going to stop us.”
He says BT is not who he is referring to here.
“When you have conflicts of interest, perceived or otherwise, it creates confusion in peoples’ minds,” McTighe continues.
“What we’ve done is to lift that fog and make it clear what people are responsible for.”
Ultimately, the Chairman says is trying to introduce a “get on with it ethos” that he hopes will feed though to stakeholders “eventually”.