IP Convergence: Beyond VoIP, Beyond Cost Savings

Reports that BT’s semi-autonomous wholesale division Openreach is providing lousy service to competitors in the U.K. should come as no surprise to anyone and should be a lesson for policy makers everywhere. In theory, what BT is attempting is an intriguing approach to the perennial problem of discrimination. The problem of course is that it is only half a loaf.

While BT took several steps to boost the independence of Openreach, including appointing its own board of directors, the problem is one of more than just independence. I recall the Bell Companies’ early efforts in the United States after the 1996 Telecommunications Act to establish the bona fides of their wholesale operations. BellSouth for instance would boast that it built a new Carrier Service Center in Alabama. Putting aside the fact that the establishment of the center was likely the fulfillment of a political promise to invest in Alabama, the fact of the matter was none of the BellSouth employees with any real ambition and know-how wanted to relocate their family to Alabama when all of the action was in the company’s Atlanta headquarters. So while they had a nice Service Center, it was poorly staffed and those that were there often wished they weren’t.

I suspect the same dynamic is occurring at Openreach. At a time when BT is touting its Next Generation Network and IPTV ambitions, is there really much of a future for a rising BT executive at Openreach? Are they going to reach the executive suite at BT if they are successful in helping the competition gain market share on BT? Does the executive suite at Openreach have any allure if it does not lead to the BT executive suite?

While I am interested in seeing how BT’s experiment ultimately ends, I think I have already seen this picture.