BT – When will the spending change and what does it mean to you?

07/03/2017

£1,200,000,000 or in other words, £1.2 Billion. That’s what BT have just spent on securing both Champions League and Europa League football rights until the 2021 season. 

An outrageous amount of money for an organisation tasked with doing much more than providing entertainment. On one hand, you have to admire Gavin Patterson (BT’s Chief Executive) for his vision for the telecoms giant. Gone are the days where BT just provided a phone line for your house. Following the trend as a ‘Quad-Play’ provider, you can now have access to T.V, Mobile, Broadband and Phone Line services all from the same provider, leading to some great deals for end consumers.

Whilst all of this investment makes Gary Lineker very happy, a chronic underinvestment into Openreach infrastructure leaves many businesses and homes with appalling broadband connectivity. As owners of Openreach, BT make the decisions into how much money is invested across the group. It is clear from a reseller perspective that Openreach are struggling to deliver to the Governments achievable expectations. 

Openreach troubles

Engineers who visit sites on our behalf are often left frustrated at their employers lack of investment in the tools available to them. It is a strange position to be in as a reseller, as we are dependent on them to deliver, so whilst I sympathise with all engineers on the ground, dealing with the organisation as a whole is frustrating.

Openreach will not speak to consumers regarding any issues, dealing only with service providers. However, when the issues are primarily down to Openreach, it essentially creates a situation where you have unhappy customers and service providers, and what I call a ‘Lose-Lose’ situation.

The only way in which this problem will be overcome is BT changing the way in which they invest their funds. The government seem to be becoming increasingly concerned with the lack of investment into Openreach, and in November 2016, Ofcom ordered for them to become a legally separate entity. This is certainly a step in the right direction, but it is important to note that whilst this process has begun, Openreach’s Chief Executive still reports to Mr Patterson (BT’s CEO). 

It is clear that Openreach’s background systems have suffered from a lack of investment for years. Departments across the organisation seem to be unable to communicate effectively with one another (ironically for a telecoms company!), often leading to situations where engineers with ‘the wrong skills’ are sent to sites, amongst many other issues. In my career, I have seen multiple cases where Openreach services have taken over a year to deliver services that should take no longer than 3 months. 

Is splitting BT and Openreach the answer?

Ofcom have a very difficult situation on their hands now. Understandably, BT seem to be very averse to investing in Openreach with the threat of a divorce looming. BT as a group have all of the capital funds though. If the proposed split was to occur, how much money would Openreach be left with, and would this be more than is available to them currently?

At the end of the day, everyone wants to be receiving a better service than is currently being received. Astoundingly, businesses often seem to be the last on the list to receive fibre connectivity, with the government tasking BT/Openreach to reach as many homes as possible before businesses. 

From a purely financial perspective, this makes sense. By introducing fibre to a cabinet that serves 100 homes, you can charge 100 customers FTTC services. Alternatively, introducing fibre to a cabinet which serves an industrial estate with 50 businesses on it, and you could potentially only be charging 50 FTTC services. The point being missed though is that by prioritising businesses, these businesses can then introduce new technologies (cloud services/VOIP) which in turn increase efficiencies, which in turn could lead to more employment. 

Interesting times ahead

The next year or so will be interesting to observe. I can’t imagine that Ofcom will be particularly impressed that BT are choosing to spend such vast amounts on Football, when the UK still ranks at only 20th in the world for broadband speeds. This is clearly not good enough, so Ofcom will need to take further action to ensure that we continue to improve connectivity across the UK.  

 

If you're currently feeling frustrated by BT and/or Openreach, let us know and find out what alternative options are available to you.