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Annual Report 2009
BT Group plc
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Contents
Welcome to the Equality of Access Board’s (EAB’s) Annual Report. The EAB was set
up in 2005 to monitor BT’s delivery of the Undertakings. It also advises BT on
compliance and reports its findings to Ofcom and industry. Key opinions on BT’s
performance during 2008/09 are expressed throughout the report and how the
EAB forms these opinions is explained on p48.
PricewaterhouseCoopers provides independent assurance on key elements of the
EAB’s Annual Report and these are indicated by the following symbol found
throughout the report.
THREE YEARS OF THE UNDERTAKINGS
Since the Undertakings were agreed in 2005
they have resulted in a number of changes in the UK
telecoms market. We look at what this means for all
of our stakeholders.
9
WLR3 REMAINS CHALLENGING
BT has continued to face challenges in
delivering Wholesale Line Rental. We assess the
company’s delivery plans for this product.
18
30
UNDERSTANDING THE ROOT CAUSES
OF NON-COMPLIANCE
We examine in detail breaches, complaints and
issues raised.
39
NGA MOVES FORWARD
Next Generation Access became an
important area of focus during 2008/09 and we
describe our evolving monitoring approach.
CHAIRMAN’S INTRODUCTION
2
NEXT GENERATION NETWORKS AND ACCESS
28
REVIEW OF THE YEAR
3
BEHAVIOURAL CHANGE
34
THE EAB
5
UNDERSTANDING NON-COMPLIANCE
39
THE UNDERTAKINGS
AND MARKET DEVELOPMENTS
9
OUTLOOK FOR 2009/10
47
HOW WE FORMED OUR OPINIONS
48
PWC’S ASSURANCE OPINION
51
GLOSSARY
53
BT’S DELIVERY FRAMEWORK
13
CURRENT GENERATION PRODUCTS
17
SYSTEMS AND ASSETS
24
The Equality of Access Board (EAB) is a committee of the BT Group plc Board. BT Group plc is a public limited company registered in England
and Wales. This is the EAB Annual Report for the period ended 31 March 2009. Unless otherwise stated all facts, statistics, events or
developments are correct to the nearest practical date before 14 May 2009. The opinions expressed are those of the EAB, not necessarily those
of BT Group plc. The EAB Annual Report is a requirement of the Undertakings given to Ofcom by BT pursuant to the Enterprise Act 2002.
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Chairman’s introduction
This is the Equality of Access Board’s fourth annual report assessing BT’s delivery
of the Undertakings.
CARL SYMON, EAB Chairman, 14 May 2009
We are working in a markedly different environment compared to
2005 when the Undertakings were agreed, both in terms of the
increased opportunities for competition and changing economic
circumstances.
Based on progress made during the last three and a half years, we
believe that the Undertakings have come a long way to fulfilling their
original goal of creating a level playing field for many products and
services utilised by all Communications Providers (CPs). This year’s
report focuses on significant developments during 2008/09.
A notable success story has been the launch and uptake of Local
Loop Unbundling, which enables CPs to offer branded services to
their own customers over Openreach’s lines. The Office of the
Telecommunications Adjudicator reported that the number of
unbundled lines in operation in March 2009 was 5.75 million – a
dramatic increase from the 100,000 lines in operation three years
earlier.
CPs told us they are satisfied that the Undertakings have created an
effective framework for change, but that there are still a few
persistent issues – the functionality of Wholesale Line Rental being a
notable example.
At the time this report was agreed, Ofcom was reviewing the future
Undertakings’ milestones, most particularly those related to
Wholesale Line Rental and Systems Separation. Depending on the
outcome of this review, this Board will adjust its monitoring
programme appropriately, and remains committed to ensuring that
future services are compliant with Equivalence of Inputs (EoI)
obligations.
2
EAB Annual Report 2009
An area seeing rapid developments is Next Generation Access. During
2008/09 we developed our monitoring approach to this technology
and found that BT’s consultation programme, as well as the launch of
some initial products, had taken place compliantly. There were no
specific obligations in the Undertakings, but general EoI principles
apply. At the time of this report, Ofcom was consulting on a variation
to the Undertakings concerning Next Generation Access and we will
further develop our approach to this area once the outcome is
published.
We value the opportunity to talk directly to our stakeholders to
understand their perspectives. This year we met a broad range of
industry representatives, including smaller providers and systems
integrators. We were concerned to hear that some providers were
disappointed with BT Wholesale’s ceasing development of voice
products in the Next Generation Network product portfolio. We will
continue to monitor this situation closely although we are satisfied
that development in BT’s 21st Century Network programme is taking
place on an EoI basis.
We are pleased that BT continues to encourage behavioural change
in line with the spirit of the Undertakings. During 2008/09 all lines of
business developed programmes to check that employees were
applying the Undertakings on a routine basis. In particular,
Openreach is to be commended for its ‘Living the Spirit’ initiative to
encourage its employees to embed compliant processes in their daily
work. This high level of sustained effort must be maintained in the
coming years – especially as the development and launch of Next
Generation products and services requires equivalent processes and
compliant behaviour to be in place from the outset.
The Board and its members play an active role in our
recommendations to BT. In 2008/09 we interacted on a wide range
of issues with the BT chief executive and all line-of-business
management teams, as well as the Ofcom chief executive. Our
unique structure – with three independent members and a BT senior
manager – gives us a broad range of skills to oversee a complex
environment. We intend to maintain our pragmatic and balanced
approach as BT moves towards the launch of its next generation
products and services and give appropriate consideration to the
outcome of Ofcom’s consultations.
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Review of the year
The Undertakings have been in place for three and a half years and during that
time BT has delivered 80% of the product milestones and a number of other
systems, governance and asset-related obligations. In this reporting year the
company was required to deliver the EoI version of some current generation
products as well as launching next generation network and access products
compliantly. The EAB has continued to evolve its monitoring approach
throughout the year and has seen an expansion of its remit.
Marking three years of the
Undertakings
The Equality of Access Office (EAO) held an industry conference
in September 2008 to debate the impact of three years of the
Undertakings. There was general consensus that the Undertakings
had provided an effective framework for change, particularly for
the achievement of the local loop unbundling milestones.
Feedback on BT’s delivery of the Undertakings was generally
positive, although there was common agreement on a number of
areas requiring future improvement and focus. In particular,
participants felt that greater consultation and debate between
Openreach and industry on the prioritisation of key product and
service developments would lead to further improvements.
Following the event, the EAB recommended to Openreach that it
should consider the implications of CPs’ investment costs when
launching new products, which it agreed to do.
WLR3 and OSS milestones
under review
BT and Openreach were engaged in delivering the Undertakings’
milestones associated with the EoI version of Wholesale Line Rental
(WLR) during the year. BT informed the EAB that it did not achieve
the milestone of moving 30% of its installed user base to WLR3
Analogue by 30 June 2008. The EAB confirmed that this was a
non-trivial breach and later agreed that BT had migrated over 30%
of its installed base by the end of 2008 as requested by Ofcom.
BT also informed the EAB that it did not migrate its installed
customer base to WLR3 ISDN2 by 31 March 2009 due to systems
development delays. Throughout 2008/09, the EAB also
considered the future targets of migrating 70% of BT’s installed
retail customer base to WLR3 Analogue by 30 June 2009 and
100% of its installed base by 30 June 2010 to be at risk.
BT was also required to logically separate its operational support
systems (OSS) by putting place user access controls. During the
past two years it was obliged to complete this process for the
systems supporting WLR3 and LLU. The EAB agreed that BT had
put these access controls in place although there was a trivial
breach regarding one of these controls. BT also met the
requirement to move 50% of ‘customer side’ records to
physically separate OSS by 30 November 2008.
In December 2008 Ofcom announced that it would assess the
remaining Undertakings’ milestones for OSS and WLR3. At the
time this report was approved this review was still under way. The
outcome will inform the EAB’s approach to monitoring these
remaining milestones.
Equivalent products on offer
The EAB monitors BT’s delivery of products on equivalent terms
to BT CPs and non-BT CPs. Analysis of the EoI product key
performance indicators published by BT further confirms that BT
CPs and non-BT CPs are not experiencing significantly different
performance levels over time although there are some short term
variations. This trend has continued over the past two years and
the EAB is satisfied that some EoI products are reaching maturity
and the performance shown in the KPIs falls within agreed limits.
The EAB will continue to monitor trends in this area in the
coming year, particularly with the launch of further next
generation products.
Next generation in the spotlight
Next Generation Access (NGA) gained a higher profile during
2008/09 with BT’s statement that it will roll out an NGA network
in the UK subject to regulatory conditions and had signed up CP
triallists. The EAB developed a monitoring approach for NGA
based on core principles during this reporting year.
During 2008/09 there were no specific NGA obligations in the
Undertakings but the generic obligations upon Openreach –
including product equivalence and information sharing
restrictions – still applied. The EAB measured progress in BT’s
consultation and engagement programme, its launch of NGA
products and its governance framework for NGA. It was satisfied
that Openreach was consulting effectively with industry and was
considering EoI in product development. At the time this report
was published Ofcom had issued a statement on establishing the
relevant policy environment to promote private sector NGA
investment and competition. It was also consulting on related
EAB Annual Report 2009
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changes to the Undertakings and the EAB will continue to evolve
its monitoring approach accordingly.
Improved rate of behavioural change
The EAB also continued to monitor that BT’s next generation
‘21st Century network’ (21CN) and associated products were
launched according to the principle of equivalence. The EAB is
satisfied that Next Generation Network (NGN) products – such as
Wholesale Broadband Connect, Ethernet Backhaul Direct and
Bulk Transport Link – launched by BT as part of its 21CN
programme during 2008/09 complied with EoI. However it
identified a trivial breach regarding the service level agreements
for these products after receiving a multi-party complaint. The
EAB is satisfied that BT Wholesale’s ‘Consult21’ industry
consultation process is functioning effectively although it made
some recommendations regarding improvements thereto.
The EAB has continued to monitor the rate of behavioural change
associated with the Undertakings. This reporting year it saw
improvements in all areas with high rates of Code of Practice
training completions and steady rates of customer satisfaction.
There was also a reduction in the number of reported ‘peripheral
vision’ incidents where call centre agents within BT Retail and BT
Global Services could have the opportunity to see and use
inappropriate information because they have access to multiple
systems.
During the year BT announced that the further development of
two next generation voice products was suspended as it felt that
the commercial model for these products was not compelling.
However it has said that it remains committed to the delivery of
WLR3 as a future voice product and is consulting with industry
on the impact of the change in strategy. The EAB will continue to
monitor that EoI requirements are factored into the development
of any future voice products.
Monitoring exchange space
In October 2008 the Undertakings were varied to require the
EAB to audit the process for allocating exchange space and
power in local exchanges. The EAO supported by BT’s Regulatory
Compliance team visited 40 exchanges as part of the audit and
found that BT was allocating space on an EoI basis although the
process was not as effective as it could be. By 31 March 2009
Openreach had launched a new EoI process for allocating space
and the EAB recommended that in the coming year, the EAO
should assess this new process. It will focus in particular on space
reserved for BT’s 21CN equipment and space allocated to non-BT
CPs which is not actively in use.
Assessing ongoing compliance
While the EAB was still focused on BT’s delivery of major
Undertakings’ milestones, it also reviewed wider compliance
across a number of Undertakings-related areas. During 2008/09
it held reviews into areas considered high risk or where issues had
occurred previously. This included investigations into the
information sharing boundaries in BT Design and BT Operate and
a preliminary review of EoI compliance in BT’s offshore
operations which handle some UK customer accounts on behalf
of BT’s downstream businesses.
The EAO has also continued its programme of compliance ‘spot
checks’ on those Undertakings’ obligations delivered in previous
years. It monitored BT’s compliance with obligations including
product migration processes and fixed-line number portability.
These ongoing compliance checks will continue to be an
important part of the EAB’s monitoring of BT’s overall
compliance with the Undertakings.
4
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EAB Annual Report 2009
The EAB is satisfied that BT is putting in place Undertakingsrelated training programmes tailored to different employee
groups and that these are steadily improving awareness of and
compliance with the Undertakings although further
improvements are still required. It will continue to monitor that
the rate of behavioural change is maintained and that high risk
groups are targeted effectively.
Root causes of non-compliance
The EAB continued to investigate the root causes of noncompliance. Looking over the past three years it found that the
largest number of breaches identified were as a result of BT’s
failure to deliver certain EoI products and processes,
inappropriate information sharing and ineffective control of
Openreach assets.
The two most common root causes were a lack of understanding
of the Undertakings by individuals and the continued use of noncompliant legacy processes. During 2008/09 there were 20 new
breaches of the Undertakings, seven of which were non-trivial.
The EAB is satisfied that BT has put measures in place not only to
remedy the breaches but also to find ways of tackling the root
causes behind many of the breaches. It recommended to BT that
the company should improve the speed at which it assesses and
remedies breaches and at the time this report was published BT
had initiated steps to achieve this goal.
Conclusion
BT made positive progress towards delivering its Undertakings’
obligations during 2008/09 in terms of encouraging behavioural
change and investigating the causes of non-compliance.
However the delivery of major product milestones remains a
serious stumbling block and a matter of concern to industry
insofar as the delivery of desired improved product functionality
and associated service levels are concerned.
Ofcom’s review of future Undertakings’ milestones may result in
some changes but in the meantime the EAB will continue to
monitor that BT offers EoI products and services in line with the
Undertakings and industry expectations. It will also watch the
delivery of EoI NGN services and evolve its approach to
monitoring NGA as BT’s strategy in this area further develops.
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The EAB
The Equality of Access Board was established on 1 November 2005 as part of the
Undertakings offered by BT to Ofcom. It has five members:
THE EAB
1
2
3
1. Carl Symon, Chairman
Carl Symon was appointed a non-executive director of BT Group plc
on 14 January 2002. He retired from IBM in May 2001 after a
32-year career, during which he held senior executive positions in
the USA, Canada, Latin America, Asia and Europe. Carl is a nonexecutive director of BAE Systems plc and Rexam plc, a former
non-executive director of Rolls-Royce plc and a former Chairman of
HMV Group plc.
2. Sir Bryan Carsberg, Independent
Sir Bryan Carsberg was Professor of Accounting and Business Finance
and Dean of the Faculty of Economic and Social Studies at
Manchester University, before becoming Professor of Accounting at
the London School of Economics from 1981 to 1984. He was
Director General of Oftel (the former telecommunications regulator)
from 1984 to 1992, Director General of the Office of Fair Trading
from 1992 to 1995 and Secretary General of the International
Accounting Standards Committee from 1995 to 2001. Sir Bryan is
currently Chairman of Council and Pro-Chancellor of Loughborough
University. He holds a number of non-executive board appointments.
He is a Chartered Accountant.
4
5
4. Dr Peter Radley, Independent
Dr Peter Radley is the Chair of the IEE Communications Sector Panel.
He is a Fellow of the Royal Academy of Engineering and has been
involved in the telecommunications industry since 1965. Between
1991 and 2002 he held positions in Alcatel with global responsibility
for technology and marketing and as Chairman and CEO for Alcatel
UK. He is a member of the Broadband Stakeholder Group. Since
2002, Peter has been an independent advisor to a number of
organisations including the DTI and South East England Development
Agency and he has also been chairman of technology start-up
companies in the broadband, IP and mobile sectors.
5. Himanshu Raja, BT senior manager
Himanshu Raja is the Chief Financial Officer of BT Design and BT’s
21CN programme. Himanshu joined BT Group in 2001 and has held
various senior financial positions in BT. Most recently he was Chief
Financial Officer of BT Operate and before that Chief Financial Officer
of BT Wholesale. Before joining BT, Himanshu worked for US
companies MCI WorldCom, UUNET and MFS. He is a Chartered
Accountant.
3. Stephen Pettit, Independent
Stephen Pettit is a non-executive director of National Grid plc and
Halma plc. He is Chairman of ROK Property Solutions plc and a
former executive director of Cable & Wireless plc. Before joining
Cable & Wireless, Stephen was Chief Executive, Petrochemicals at
British Petroleum. He was previously a non-executive director of
National Air Traffic Services, KBC Advanced Technologies plc and
Norwood Systems Limited.
EAB Annual Report 2009
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About the EAB
The EAB is a committee of the BT Group plc Board although its
structure, membership and obligations to Ofcom make it unique. It
has oversight of the whole of BT in its mission to monitor compliance
with the Undertakings. The EAB’s monitoring work with different BT
lines of business is described in more detail on p13.
The EAB has Terms of Reference setting out its role, monitoring and
reporting remit, its powers, how its members are appointed and its
organisation. See http://www.bt.com/eab for more information.
The Undertakings require that the EAB has five members: three
independent members, one BT Group plc non-executive director and
one BT senior manager. There were no changes in membership
during 2008/09.
The EAB is supported by the EAO and the EAB Secretary on all
matters within its remit. The EAO reports regularly to the EAB on the
detailed status of BT’s delivery of the Undertakings. It carries out
investigations into complaints made by CPs and into possible
breaches of the Undertakings on the EAB’s behalf.
The EAB Secretary organised four Board meetings as well as a
number of other informal sessions and enabled the EAB to receive a
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wide range of input to its deliberations. Minutes have been provided
to Ofcom and the EAB Chairman regularly reported the EAB’s views
to the BT Group plc Board.
The EAO conducted a board effectiveness review (a survey of
individual EAB members) in January 2009. All EAB members were
satisfied with the quality of monitoring and reporting and with the
information received from within BT. They were also satisfied with
the Board’s access to senior executives.
The EAO Director has reported to the EAB that his department is
adequately resourced. The EAB has nine dedicated staff, eight in the
EAO and the EAB Secretary. The EAB judges that BT has continued to
provide satisfactory resources for the fulfilment of its remit.
Monitoring, reporting and advising
Monitoring
The EAB monitors BT’s delivery of key Undertakings, reports on
progress to Ofcom and CPs and offers advice to BT on its compliance
with the Undertakings. The EAB and the EAO fulfil these obligations
through a number of formal and informal processes shown in the
diagram below:
HOW WE WORK
CORE MONITORING PROCESSES
AUDIT & VALIDATION PLAN
MILESTONE VALIDATIONS
PRODUCT KPIS
CPs
CPs
BT
COMPLAINTS
COMPLAINTS & BREACHES
EAO
BEHAVIOURAL MEASURES
EXEMPTIONS & VARIATIONS
EAO MONITORING REPORT
ISSUES MANAGEMENT
EAO REVIEWS
& SPOT CHECKS
EAB BREACHES PROCESS
REGULAR & AD
HOC BT REPORTS
EAB MEETINGS: DELIBERATION & DECISIONS
DIRECT CP VIEWS
EAB MINUTES & OVERVIEWS
EAO ASSESSMENTS
ANNUAL REPORT
OFCOM BRIEFING
REPORTING TO EAB
6
EAB Annual Report 2009
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The EAB
The annual internal audit confirmed that the EAB maintained
rigorous monitoring processes during 2008/09. It continues to
monitor product milestones using the processes described at
http://www.bt.com/eab. This involves a monthly monitoring and
reporting cycle to evaluate progress towards major deliverables and
BT’s product KPI performance. The EAB also monitors BT’s ongoing
compliance with the Undertakings through reviews and spot checks.
During the year, the EAB developed a principles-based approach to
monitoring NGA. There were no specific NGA obligations in the
Undertakings during 2008/09, but the generic obligations upon
Openreach – including product equivalence and information sharing
restrictions – still applied. At the time this report was published
Ofcom was consulting on proposed variations to the Undertakings to
allow Openreach to control and operate Fibre-to-the-Cabinet
electronics and the EAB will continue to evolve its monitoring
approach accordingly. In December 2008 the EAB visited the NGA
test site at Adastral Park, Ipswich to see Openreach’s progress with
the new technology. For more information on the EAB’s approach to
NGA, see p30.
The EAB was also given additional responsibility by BT and Ofcom
with regards to monitoring exchange space. A variation to the
Undertakings in October 2008 required the EAB to carry out regular
audits of the exchange space review and allocation processes. The
EAO with support from BT’s Regulatory Compliance team visited 40
exchanges across the UK as part of the audit. The findings of these
reviews can be found on p26.
Reporting
The EAB is required to publish this report following the presentation
of a confidential report to Ofcom. It must report on areas including
its views on the governance measures associated with the
Undertakings, BT’s delivery of major milestones, potential future
breaches of the Undertakings and the findings of the product key
performance indicators. PricewaterhouseCoopers LLP provides
independent assurance to Ofcom and the EAB on elements of this
report. For more information about the assurance of key elements of
the report which is agreed on a tri-partite basis between the EAB,
Ofcom and PwC and how the EAB’s opinions were formed, see p48.
The EAB also publishes a regular update on its work on its website,
http://www.bt.com/eab.
Advising
The EAB advises BT on its compliance with the Undertakings. During
2008/09 the EAB offered advice to BT following product validations,
ongoing reviews of compliance and as a result of product validations,
breaches, complaints and informal checks. It made 16
recommendations to BT regarding the company’s compliance in areas
such as information sharing, product equivalence and industry
consultation. More information about the EAB’s identification of and
advice regarding non-compliant incidents can be found on p39.
Stakeholder engagement
The EAB has three key sets of stakeholders in the UK: CPs and
industry associations in the UK telecommunications industry, Ofcom
and BT. The EAB actively engages with all three on major decisions,
although its relationship with BT is the most complex in terms of its
responsibilities of monitoring, reporting and advising on the
company’s delivery of the Undertakings.
The EAB seeks to engage with a wide range of stakeholders across
industry, including CPs, industry associations and companies
associated with third party systems integration. The EAO also attends
Consult21 sessions and the Next Generation Access Forum as an
observer. It handles issues raised by CPs and also investigates formal
complaints raised by CPs. For more information on issues and
complaints raised by CPs, see p41.
During 2008/09, the EAB has continued to engage with stakeholders
from industry. Carphone Warehouse, Telstra, Strategic Imperatives
and the Fixed Service Providers’ Association attended EAB meetings.
The EAO also held an industry event in London in September 2008 to
mark three years of the Undertakings. For more information, see p9.
As a result of international interest in the functional separation
model used in the regulation of BT, the EAO met representatives from
South Korea, Brazil and New Zealand during 2008/09.
The EAB also continues to meet Ofcom regularly. The Ofcom CEO
attended an EAB meeting in February 2009 and the EAO has regular
meetings with Ofcom policy directors regarding the Undertakings.
The Executive Chairman of the Office of the Telecommunications
Adjudicator (OTA2) and NGNuk has also attended EAB meetings
during 2008/09, and the EAO has regularly met OTA2 to discuss
progress.
The EAB met a range of BT stakeholders during the year. This
included the BT Group CEO and the CEOs from each BT line of
business.
Our view on our governance and
resourcing
The EAB has considered its governance arrangements against the
criteria set out in ‘How we formed our opinions’ on p48 and is
satisfied that these are functioning well and that it is effective in
monitoring progress and advising BT on future steps.
The EAB is also satisfied with the level of resourcing available to
enable it to fulfil its remit. It expects to continue to engage with a
wide range of stakeholders as its role evolves from focusing on BT’s
delivery of the current generation of products to monitoring the
launch of next generation products and overseeing ongoing
compliance.
EAB Annual Report 2009
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“It is now over three years since the
BT Undertakings came into effect
and much has been achieved during
that period. Nevertheless, there are
still some major Undertakings’
milestones to be achieved”
OFCOM’S ANNUAL PLAN 2009/10
8
EAB Annual Report 2009
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The Undertakings
and market developments
During 2008/09 there were a number of developments in the UK
communications sector. The global economic downturn posed
challenges for those operating in the UK telecoms sector, although
both Virgin Media and BT announced that they were investing in
next generation access infrastructure. To reflect the changes in the
market since 2005 when the Undertakings were agreed, Ofcom
announced a project in December 2008 to assess the remaining
Undertakings’ milestones. This section describes this review and
other changes to the Undertakings during 2008/09, as well as
considering industry views on three years of the Undertakings.
The Undertakings three and a half years on
Since the Undertakings were granted in 2005, BT has delivered 80%
of the key milestones. These have included the delivery of current
generation products such as the ready for service dates for Wholesale
Line Rental, Ethernet and Local Loop Unbundling, as well as systems
separation obligations and those covering the establishment of
Openreach.
The table on the opposite page shows the range of obligations that
BT was obliged to deliver over the past three and a half years as well
as those due in the coming years. The table shows that a large
number of BT’s Undertakings’ obligations were delivered in previous
years but those remaining are also significant in scale.
The EAO held an industry event in London in September 2008 to
mark three years of the Undertakings. There was a general consensus
among the participants that the Undertakings had provided an
effective framework for change, particularly for the achievement of
the local loop unbundling milestones. The participants also felt that
they had provided a valuable roadmap and governance structure for
the launch of equivalent products.
Feedback on BT’s delivery of the Undertakings was generally
positive, and although not specifically in the scope of the
Undertakings it was thought that the Undertakings had led to an
improvement in service performance as they had made Openreach
become more market-focused. It was evident also that Openreach’s
relationships with its customers had matured and that its creation
had led to a cultural shift in BT’s relationship with industry. Additional
perceived benefits of the Undertakings were that they had
encouraged industry to invest in providing increased competition
and to begin rationalising and modernising their systems’ interface
with BT. The creation of the Equivalence Management Platform – the
operational support system underpinning EoI product delivery – had
also led to a step change in functionality although further
improvements were required.
There was a common agreement on a number of areas requiring
future improvement and focus. Prime among these was a concern
that BT had focused on delivering each milestone rather than on
ensuring service quality. Participants felt that greater consultation
and debate between Openreach and industry on key product and
service developments would lead to further improvements. It was
hoped that Openreach would in future achieve an improved balance
between helping CPs realise their plans for innovation whilst
applying the principles of equivalence and achieving good
performance.
At an operational level it was recognised that there were some
specific issues BT needed to address such as the provision of
adequate space and power for CP equipment in exchanges, effective
pre-testing of systems prior to ‘go-live’ dates and a more transparent
and consultative process for requesting new products and changes to
existing products. More broadly it was also felt that the functional
separation model produced some unintentional results. These
included poorer communication among the BT lines of business and
the lack of an overall BT product roadmap for CPs to review and
debate. In particular, industry needed more information on the voice
portfolio strategy and the implications for the current organisational
boundaries in BT.
Following the EAO event the EAB recommended that BT should
inform it of the future plans for Openreach’s supporting systems for
the WLR3 product. BT should also give details of the migration path
towards successor products and consider the implications for CPs’
investment costs of interfacing to the Equivalence Management
Platform as well as to older systems. At the time this report was
published, BT had begun to report to the EAB on these topics.
EAB Annual Report 2009
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BT’s Undertakings’ obligations from 2005/06 onwards
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
Establish Openreach,
including Openreach
results reported in the
same format as BT’s,
appoint Openreach
CEO, Openreach
Annual Operating Plan
to be established and
Openreach SLAs offered
to BT Wholesale
Openreach to be
headquartered in a
separate location,
new rules for Openreach
financial information
to be introduced and
Openreach’s accounts
to be reconciled with
BT’s regulatory accounts
Ongoing compliance
with governance and
organisational
obligations
Exchange space to be
allocated on an EoI basis
Exchange space to be
allocated on an EoI basis
Ongoing compliance
with governance and
organisational
obligations
Ongoing compliance
with governance
and organisational
obligations
Improve access
to engineering
appointment books
Wholesale Line Rental
(WLR3) Analogue EoI RFS
WLR3 Analogue IBMC
30% target
Future WLR obligations
to be confirmed following
Ofcom’s review
of the Undertakings
WLR3 ISDN2 IBMC
Establish EAB
Local Loop Unbundling
EoI RFS including
IPstream using LLU
WLR3 ISDN30 IBMC
Ongoing compliance
with product obligations
from previous years
Publish a Code of Practice
EoI RFS for Ethernet
products (WES, BES,
WES Backhaul and WEES)
IPstream Connect
available for order
Management Information
Systems separation
(level 2)
Establish information
sharing boundaries
in BT Wholesale
and Openreach
EoI IBMC for relevant
Ethernet products
IPstream Connect IBMC
and migration of CP
end-user base
Future OSS obligations
to be confirmed
following Ofcom’s review
of the Undertakings
Estimates of space
availability required and
a list of exchange space
vacations to be published
IPstream using LLU IBMC
Ongoing compliance with
product obligations from
previous years
Ongoing compliance
with product obligations
from previous years
Ready to mass migrate
Featureline
customerside records
IPstream EoI RFS
BT’s relevant broadband
service IBMC
Management Information
Systems roadmap
‘Logical’ separation of
Operational Support
Systems (stage two)
Ensure NGN is compliant
with the principles
in the Undertakings
and publish plan of record
50% of relevant
customerside records to
be migrated to physically
separate Operational
Support Systems
Develop NGA services on
an EoI basis (with possible
variations subject to
Ofcom consultation)
WLR3 ISDN2 EoI RFS
WLR3 ISDN30 EoI RFS
WLR3 Analogue EoI
‘good faith’ date
‘Logical’ separation of
Operational Support
Systems (stage one)
Ready to mass migrate
customer side records
to PSTN
Make address matching
service available
Management Information
Systems separation and
testing by external audit
(level 1)
Ensure NGN is compliant
with the principles in the
Undertakings
Ensure NGN is compliant
with the principles in the
Undertakings and publish
plan of record
Develop NGA services
on an EoI basis
10
Governance and operational obligations
Next Generation Networks
Delivery of current generation products
Next Generation Access
EAB Annual Report 2009
Systems obligations
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The Undertakings and market developments
Changes to the Undertakings
during 2008/09
In December 2008, Ofcom announced a project to assess the
remaining Undertakings’ milestones as a result of a number of new
challenges that have arisen since the Undertakings were agreed in
2005. These new challenges include demands by CPs for new
services and improved systems functionality, BT’s initial work around
NGA and delays to the implementation of BT’s 21CN programme
which Ofcom said had affected the delivery plans for certain
Undertakings’ commitments. At the time this report was approved
this review was still under way and Ofcom was planning to consult on
the subject. The EAB awaits the outcome with interest.
Variations during 2008/09
In 2008/09 BT and Ofcom agreed a further four variations to the
Undertakings bringing the total to 18 since the Undertakings were
agreed. The four variations were:
Variation 15 – To extend the time from 31 May 2008 to 31 December
2008 for Ofcom and BT to agree whether or not EoI should apply to
products existing at the time the Undertakings were agreed but
which were not required initially to be delivered on an EoI basis. This
variation was requested so that BT and Ofcom could consider issues
around an exemption request for one of these products –
Wavestream National.
Variation 16 – A significant change that introduced the requirement
for BT to:
Publish the NGN plan of record on a quarterly basis and to publish
the principles that BT must follow for consultations related to its
NGN programme;
To give at least three months’ notice of any projected NGN launch
dates;
Review the processes and products used to manage
accommodation within BT’s exchanges relating to Openreach’s
Shared Metallic Path Facility (SMPF) Local Loop Unbundling (LLU)
and Ethernet products. Specifically BT must:
– publish guidelines for the process of allocating exchange space
and power (used in relation to Openreach SMPF LLU and
Ethernet products) on an EoI basis
– conduct a proactive review of exchange space with a view to
freeing up space
– review the scope of the existing LLU co-mingling product to
allow more flexible use of exchange space.
The variation also required the EAB to carry out regular audits of the
space review and allocation processes.
A further requirement was for BT to implement changes to the
obligations on the separation of Operational Support Systems for
voice services and those containing network and service information,
introducing the principle of certain shared Operational Support
Systems between Openreach and BT Operate.
Variation 17 – Following Ofcom’s consultation on the matter, the EoI
obligation on IPstream was restricted to those geographic markets
where BT is determined to have Significant Market Power (SMP). This
variation added an EoI obligation for IPstream Connect but only in
markets where there are fewer than four wholesale providers and BT
has SMP.
Variation 18 – Minor drafting changes to correct text in the
Undertakings prior to Ofcom publishing a fully revised version
including all of the variations.
At the time this report was approved Ofcom was consulting on a
variation to the Undertakings regarding NGA. For more information
see below and p30.
Exemptions during 2008/09
BT and Ofcom agreed a number of exemptions, both permanent and
temporary, to the Undertakings. These exemptions included an
extension to the RFS date for Featureline to 1 June 2008, and a
permanent exemption for Redcare Fire and Security until such time
as reasonable demand arises from other CPs.
BT and Ofcom completed the review of products existing at the date
at which the Undertakings were agreed and which were not covered
in the initial EoI obligations (see variation 15). The final stage in this
was publishing an exemption to establish RFS and IBMC dates for
the Wavestream Connect and Wavestream Regional products at
31 December 2008 and 1 October 2010 respectively.
The EAB has validated delivery of the eight exemption-related
obligations due in the year to the 31 March 2009. The EAB expressed
disappointment to BT about the quality and timeliness of its delivery
of the ISDN/Highway conversion process. Others such as the
Featurenet and Featureline RFS milestones took longer to conclude
because of their complexity. The EAB appreciates that the exemptions
are complex exceptional items, yet it believes that they require as
prompt attention from BT as any other compliance milestone.
Other relevant events during 2008/09
During 2008/09 Ofcom rolled back regulation in Market Three of the
UK wholesale broadband access market. It defined Market Three as
those areas covered by exchanges where there are four or more
operators, covering 69.2% of UK premises. Ofcom agreed to revoke
the EoI obligations on IPstream and its successor products in Market
Three, providing BT with pricing flexibility to allow it to provide
differentiated products to customers.
BT was considered to have SMP in Market One – which covers areas
in which BT is the only operator – and Market Two, where there are
two or three operators (including BT). Some CPs expressed concern
that the removal of EoI obligations in Market Three may have an
impact on Markets One and Two. However Ofcom concluded that it is
confident that the governance and monitoring structure introduced
as part of the Undertakings together with other regulatory
safeguards will minimise the risk of competitive distortion.
NGA became a hot topic during 2008/09 with BT announcing that it
was considering rolling out an NGA network dependent on the
regulatory climate and Virgin Media also rolling out its own NGA.
Ofcom launched a consultation on NGA in 2008: “Future Broadband
– policy approach to Next Generation Access” and it followed this up
in March 2009 with a statement on the broad policy framework for
NGA, entitled “Delivering superfast broadband in the UK: setting the
right policy framework”.
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At the time this report was agreed Ofcom was also forming its
conclusion on a consultation on a variation to the Undertakings
regarding BT’s proposed investment in Fibre-to-the-Cabinet (FTTC)
technology which requires electronic equipment to be located in
street cabinets. Ofcom also held a separate consultation on the
regulatory environment for fibre network deployments in new build
developments and it published a statement on this in March 2009.
For more information see p30.
Two government-backed reviews of broadband also have
implications for NGA. The first was Francesco Caio’s report “The Next
Phase of Broadband UK: Action now for long term competitiveness”
into barriers to investment in NGA. The report recommended four
key areas where the government should consider specific initiatives
to support and facilitate the deployment of NGA, including setting
out a framework for the delivery of NGA and investing time and
resources to identify remedies to adopt in case the market fails to
deliver the required NGA investments. Building on this work will be
Lord Carter’s ‘Digital Britain’ report which is due to be published in
summer 2009. His interim report considered areas for discussion,
such as the regulatory incentives that may be necessary for NGA to
succeed.
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Wider developments across Europe could also play a factor in how
the UK market develops. The European Commission continued to
push forward its proposals for telecoms reform, including functional
separation. During 2008/09 BT was the only incumbent operator in
Europe to have functionally separated its operations although a
similar model was agreed in Italy in December 2008. At the time this
report was published a number of other telecoms regulators across
the world were considering whether functional separation could be
used to stimulate competition in the wholesale fixed-line telecoms
market and were debating how to fund NGA and NGN in their own
countries.
Our view on market developments
The recent developments regarding the remaining Undertakings’
milestones reflect the changing environment in which UK
communications companies operate. Changes on a wider policy level
could have an impact on the Undertakings and will almost certainly
have an impact on the market in which the Undertakings apply. The
EAB will continue to monitor BT’s compliance with the remaining
milestones as well as its ongoing compliance with those that have
been delivered in previous years as the market continues to evolve. It
will also engage with industry to understand the impact that any
changes might have on the consumption of EoI services.
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BT’s delivery framework
BT has a company-wide responsibility to deliver its Undertakings’ commitments. The
EAB works with each of BT’s lines of business to monitor compliance. It also monitors
BT’s overall governance framework for delivering the Undertakings.
The EAB has responsibility for monitoring that all areas of the
business comply with the Undertakings’ obligations specific to their
area of work. These are explained below.
Openreach
Openreach is the BT line of business with principal responsibility for
the delivery of the majority of the EoI products and the EAB has a
particular duty to monitor Openreach’s operations and governance.
Over the past three years Openreach has had to meet a number of
deadlines regarding its creation and governance as well as launching
major EoI products. During 2008/09 the EAB focused on
Openreach’s delivery of key products and systems milestones, service
improvements and the development of the Equivalence
Management Platform.
In 2008/09 Openreach underwent a reorganisation which included
consolidating all of its compliance and legal obligations into one
team. It also undertook a review of its product development
programme with the aim of creating a more collaborative model of
engagement with customers.
Openreach has continued to engender a compliance culture across its
teams by developing a comprehensive set of tools to embed
equivalence in all key business processes and initiatives. The project
is also seeking to reinforce compliant ways of working across
Openreach’s boundaries with other parts of BT. The EAB considered
this to be a positive development but through its detailed reviews of
a selection of Openreach’s operational processes – including billing,
product development and CP escalations – it identified some
instances of non-equivalence and weak governance processes that
required prompt resolution.
As noted in last year’s Annual Report the EAB requested that
Openreach consider all aspects of compliance in product
development and launch following a number of breaches. Openreach
initiated an ongoing programme to address these issues as a result.
During 2008/09 the EAB has recommended a further range of
actions on which Openreach is required to report in the coming year.
For more information see p43.
THE EAB’S ROLE WITHIN BT’S REPORTING STRUCTURE
OFCOM
EAB
BT GROUP PLC BOARD
PUBLIC REPORTING
BT CEO
OPERATING COMMITTEE
OPENREACH
BT WHOLESALE
Management reporting
BT RETAIL
BT GLOBAL
SERVICES
Compliance oversight
GROUP
FUNCTIONS
BT DESIGN
BT OPERATE
Compliance reporting
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The EAB believes that Openreach has remained committed to
delivering its Undertakings’ obligations during 2008/09. It is also
satisfied that Openreach is proactively taking steps to identify and
resolve incidents of non-compliance and is implementing specific
training programmes to target those working in high risk areas.
However it will continue to monitor that Openreach embeds EoI
principles at the core of its processes.
BT Wholesale
BT Wholesale has responsibility for delivering EoI products – most
notably those in the IPstream product portfolio. It also supplies
products which underpin the roll-out of BT’s 21st Century Network
and runs the ‘Consult21’ consultation scheme. During 2008/09, the
EAB validated products in both the IPstream and 21CN product
portfolios (see p20 and p28). In the coming year, it will also monitor
BT’s compliance with a variation to the Undertakings which requires
BT Wholesale to offer the IPstream Connect product on an EoI basis
in those markets where BT has SMP.
Following BT’s reorganisation in 2007, BT Wholesale implemented a
high level management restructuring. The Undertakings require the
separation of the management of Core Network Services and ValueAdded Network Services and the EAB confirmed that the new
structure is compliant.
BT Retail
BT Retail consumes products including WLR3 from Openreach, and
IPstream from BT Wholesale. These products need to be consumed
equivalently and during 2008/09 BT Retail has faced challenges in
the migration of its installed customer base from legacy telephony
products to WLR3. This is covered in more detail on p19.
BT Retail has a residual engineering function supporting the delivery
of its Payphones product. A recent breach case highlighted the
continuation of some established practices in respect of the testing
and maintenance of non-EoI PSTN telephony products that do not
comply with the Undertakings’ rules. The EAB is monitoring BT
Retail’s remedial action for this breach.
BT Global Services
BT Global Services focuses on offering managed services to UK and
multi-national corporate customers and as a result many of its
activities are outside of the Undertakings. However, it is a consumer
of products in the Wholesale Line Rental and Ethernet portfolios and
in respect of these must adhere to all the relevant Undertakings’
obligations. During 2008/09 it made WLR ISDN products available to
new end users on an EoI basis.
BT Design
Created in 2007 as a result of BT’s reorganisation, BT Design develops
products and services as well as owning and managing BT’s 21CN
programme. This involves delivering the processes, systems and parts
of the network not owned by Openreach to enable other parts of BT
to provide solutions over BT’s next generation network. BT Design’s
aims include improving speed to market and the customer
experience and reducing development costs.
BT Design employees are obliged to understand and adhere to new
information sharing rules, which came into force in April 2008
following a variation to the Undertakings. The EAB identified BT
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Design’s way of applying these information sharing rules as a
potential risk and conducted a review of the controls and processes
that BT Design had put in place. The EAB concluded that although
the controls were mainly working well there was still scope for
improvement (see p44 for more information).
BT Operate
BT Operate was created at the same time as BT Design to deploy and
manage the services that BT Design creates. BT Operate’s employees
work closely with the other BT lines of business and must follow strict
rules on information sharing to remain compliant with the
Undertakings.
At the EAB’s request, BT’s Regulatory Compliance team conducted a
review of the controls governing permitted access for BT Operate
employees to Openreach data for operational purposes. These were
found to be working well although the EAB recommended that BT
Operate tighten the controls around teams with a legitimate
operational need to access certain restricted data.
The majority of BT’s (non-Openreach) engineering force has
transferred to BT Operate. An EAB review established that the
boundaries and ownership of assets between BT Operate and
Openreach were clearly defined but that BT Operate should more
tightly control appropriate access to information by engineers and
enhance associated compliance training and awareness.
The EAB has highlighted as a potential compliance risk the off-shore
operations managed by BT Operate for some of the back office
processes supporting the ordering and consumption of EoI products.
Towards the end of 2008/09, the EAO was commissioning an audit of
BT’s offshore operations in conjunction with BT Operate that will
include a check of appropriate compliance controls and contractors’
awareness of the relevant Undertakings’ obligations. The EAB will
review the conclusions of the audit programme in the coming year.
BT Ireland (North)
BT has an obligation to implement aspects of the Undertakings in
Northern Ireland although its operations are not subject to the
structural provisions and it continues to function as an integrated
unit. BT Ireland (North) has a separate programme office to manage
and report on the Undertakings and over the year the EAO has
attended the meetings of its Regulatory Compliance Committee
which coordinates delivery of the Undertakings.
The EAO has also participated in the Ofcom Northern Ireland Telecom
Stakeholders’ Forum. Members of the Forum requested confirmation
that the same level of product performance was being achieved in
Northern Ireland as in the rest of the UK. An EAO analysis of the
product KPIs showed that the same performance seemed to be
achieved in the province as in the rest of the UK.
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BT’s delivery framework
BT’s governance framework
The governance structure that was established by BT when the
Undertakings came into force has remained largely unaltered in
function. However, the form of some of the key bodies has slightly
changed in order to evolve BT’s coordination, oversight and delivery
of the Undertakings. The current framework consists of the:
Enterprise Programme Board: a group-wide body for setting
policy and direction, managing priorities, resolving issues and
ensuring consistency across BT’s lines of business
BT Group Undertakings Programme Team: supports the Enterprise
Programme Board by providing regular monitoring and reporting
information on BT’s delivery of the Undertakings
BT’s line of business Undertakings programme delivery offices:
provide detailed Undertakings progress reports to the
Undertakings Programme Team and to the EAB.
Our view on BT’s governance of the
Undertakings
The EAB has considered BT’s governance framework against the
criteria set out in ‘How we formed our opinions’ on p48 and is of the
view that the framework has worked well in terms of monitoring and
reporting but there are elements of BT’s governance of specific
processes, for example, Openreach billing and product management
processes that need to be improved.
The volume and significance of the remaining Undertakings’
obligations underline the importance of BT’s maintaining a robust
and effective governance framework.
The size of the Undertakings’ delivery teams has been reduced to
reflect the fact that 80% of the Undertakings’ milestones have now
been delivered and ongoing compliance practices are embedded as
part of business as usual activities. However, over the year BT has
continued to operate business-wide teams for the coordination of
key deliverables such as operational support systems and next
generation products.
The Enterprise Programme Board can refer portfolio and technical
issues to the Design Council (which oversees the effective
development and delivery of the global 21CN platform) if these
cannot be directly resolved between BT’s lines of business. Last year,
the EAB conducted a review of the Design Council’s remit and
processes and concluded that these were congruent with the
Undertakings. It recommended that Design Council members should
be made fully aware of the permissions and limitations of their role.
The EAB followed up BT’s actions in this regard and is satisfied that
BT has taken appropriate measures to minimise any potential
compliance risks.
In 2007 BT established a 21CN governance framework comprising
leadership,delivery and external affairs teams to liaise with key
stakeholders. Together, these bodies oversee the compliant launch of
new 21CN products, services, processes and platforms.
In 2008, the EAB conducted a detailed review of this governance
framework and the associated processes and controls. The review
found that a comprehensive framework had been put in place to
address the Undertakings’ requirements but that it was too early to
test how effectively it was working in practice. For more information
see p30.
EAB Annual Report 2009
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“In the absence of a 21CN successor
voice product, WLR3 is increasingly
important to industry. Therefore
Openreach’s priority must be to
continue delivering improvements to
WLR3 over and above the valuable
functionality currently available”
ASHLEIGH POTTER, CO-CHAIR OF THE FIXED SERVICE PROVIDERS’
ASSOCIATION
16
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Current generation products
BT supplies a wide range of products covered by the Undertakings to CPs. These
products enable CPs to offer their own services via BT’s existing copper local loop
and backbone network infrastructure. In this report, these products are described
as current generation as they use the existing infrastructure – on p28 we look
at products being deployed via BT’s next generation network.
Openreach and BT Wholesale are required to deliver EoI for a range
of wholesale products. EoI involves offering these products on the
same timescales, terms and conditions and using the same systems
and processes for both BT CPs and non-BT CPs. This enables both sets
of CPs to use the same network ‘building blocks’ to offer services to
their own end customers.
The EAO also conducts a range of ongoing compliance checks to
ensure that BT has remained compliant with Undertakings’
obligations that have been delivered in previous years. As the
deadline for the majority of the large current generation product
milestones has passed in previous years these checks will increase in
number in the coming years.
Current generation products that must be delivered on an EoI basis
are supplied by either Openreach or BT Wholesale and include Local
Loop Unbundling, Wholesale Line Rental and some Ethernet
products. The EAB monitors that Openreach and BT Wholesale meet
the Undertakings’ requirements for the initial delivery of these
products. It does this through its validation process for current
generation product milestones which includes four broad categories
of success criteria – product, process, people and systems.
In the following pages, we look at BT’s delivery of current generation
products during 2008/09 and its compliance with a number of other
obligations associated with current EoI products.
The launch of EoI products involves a number of different stages.
Delivery typically includes the requirement to meet a Ready for
Service (RFS) date for each product. From this date, BT must make
available an equivalent product or service for the end users of both
BT and non-BT CPs. Many of the RFS dates for major products have
now passed and BT’s focus has moved to ensuring that it meets the
Installed Base Migration Complete (IBMC) date by which all existing
BT CP (largely BT Retail) end-users must be moved over to the
equivalent product.
EAB Annual Report 2009
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Wholesale Line Rental
Wholesale Line Rental (WLR) supplied by Openreach is used by CPs to offer their own branded telephony and data services to customers.
The diagram below shows that there are a number of different WLR products:
WLR3 ANALOGUE: Allows a CP to provide the features of a traditional telephone line
BT EXCHANGE
BT CORE
NETWORK
WALL SOCKET
CP
NETWORK
ONE ANALOGUE CHANNEL
USUALLY FOR VOICE
WLR3 ISDN2: Allows a CP to provide the security of two circuit-switched digital channels (eg for debit/credit card transactions)
BT EXCHANGE
BT CORE
NETWORK
ISDN2
LINE BOX
CP
NETWORK
TWO 64KB DIGITAL CHANNELS MOSTLY
FOR DATA, BUT CAN BE USED FOR VOICE
WLR3 ISDN30: Allows a CP to connect an end user’s switchboard to the local exchange providing up to 30 voice and/or data channels
BT EXCHANGE
BT CORE
NETWORK
USER’S
SWITCHBOARD
CP
NETWORK
UP TO THIRTY 64KB DIGITAL CHANNELS
USUALLY FOR VOICE BUT CAN CARRY DATA
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Current generation products
Over the past few years, Openreach has aimed to move customers
away from using the previous version of WLR (known as WLR2)
supplied via older ‘tactical’ operational support systems to a newer
version (WLR3) offered via the Equivalence Management Platform
(EMP) which was intended to support a higher volume of orders. The
EMP enables Openreach to offer products and services on an
equivalent basis – see p25 for more information on the EMP.
Some CPs have been reluctant to migrate to WLR3 as they felt that it
initially offered reduced functionality in comparison to the older
WLR2 product. Migration to the newer product also meant that they
must change their own systems interfaces – a costly exercise for
many CPs. However, during 2008/09 a growing number of CPs
adopted the WLR3 product as product functionality improved and
quality of service problems associated with the EMP in previous years
diminished.
Openreach has been obliged to meet a series of deadlines for the
delivery of an EoI WLR service since the Undertakings were agreed:
2007/08
WLR3 Analogue
EoI RFS – good
faith date
WLR3 Analogue WLR3 Analogue WLR3 Analogue
IBMC 70%
EoI RFS
IBMC 30%
WLR3 ISDN2
EoI RFS
WLR3 ISDN30
EoI RFS
2008/09
2009/10 and
beyond
2006/07
WLR3 ISDN2
IBMC
WLR3 Analogue
IBMC 100%
WLR3 ISDN30
IBMC
In previous years both Openreach and BT’s downstream businesses
have faced challenges in delivering their WLR3 obligations. In
2006/07, BT did not meet the ‘good faith gesture’ date for delivering
WLR3 Analogue RFS. In 2007/08 it made a WLR3 service available to
BT and non-BT CPs on an EoI basis but had to revert to non-EoI
processes soon after launch for a short period of time. BT rectified
this problem rapidly and Openreach has since aimed to improve the
functionality of WLR3. However in July 2008 BT CPs once again had
to fall back to the older ‘tactical’ systems for a small number of orders
for a short period of time. The EAB considered this to be a trivial
breach of the Undertakings and is maintaining its programme of
monitoring ongoing compliance with regards to WLR3.
The EAB considers that the future targets of migrating 70% of BT’s
installed retail customer base to WLR3 by 30 June 2009 and 100%
of its installed base by 30 June 2010 are at risk, although at the time
this report was approved the delivery deadlines were under review.
For more information see p12.
WLR3 ISDN30 RFS (29 February 2008)
Openreach was required to make its WLR3 version of ISDN30 ready
for service by 29 February 2008. ISDN30 is a voice and/or data
service typically used by larger organisations. This validation was
under way at the time the last EAB Annual Report was published and
in early 2008/09 the EAB agreed that BT had met the RFS date for
this obligation, although there was a trivial breach of ongoing
compliance relating to the processing of a small number of new
end-user orders. The teams processing the orders have since been
given bespoke compliance training and the EAB considers that the
breach has been resolved.
WLR3 ISDN2 IBMC (31 March 2009)
ISDN2 is mainly ordered by CPs operating in the SME sector. BT was
due to migrate its installed retail customer base to the WLR3 version
of ISDN2 by 31 March 2009 but has informed the EAB that it did not
meet the deadline because of systems development delays. It is also
unlikely to meet the December 2009 IBMC date for the WLR3 version
of ISDN30 for similar reasons. These obligations were included in
Ofcom’s review of the future Undertakings’ milestones, which was
ongoing at the time this report was approved.
Our view on WLR3
Although the launch of an EoI service for all new end users was a
major step by BT, migration of BT’s installed retail base to the EoI
version of WLR remains of importance for many in industry. While an
increasing number of CPs are moving their customers to the new
service, uptake remains slower than originally anticipated partly due
to development bottlenecks on the EMP. The further delay to the
future delivery deadlines will be a cause of concern for industry but it
is important that Openreach is able to prioritise resources effectively
and not jeopardise the service already on offer to those using WLR3.
During 2008/09, Openreach and BT were obliged to meet a number
of obligations regarding the migration of users to WLR3 and the
launch of ISDN services on an EoI basis. These are described in more
detail below.
WLR3 Analogue 30% IBMC (revised date 31 December 2008)
BT was obliged to migrate 30% of its installed retail end-user base to
WLR3 Analogue by 30 June 2008. BT has the largest end-user base
of any CP and migrating this base to WLR3 was a major test of both
the stability of the EMP and BT’s downstream support systems. BT
did not meet the June date due to a number of systems and
operational issues that would have compromised the customer
experience if migrations had proceeded at volume. The EAB
confirmed that this was a non-trivial breach and later confirmed that
BT had migrated over 30% of its retail customers to WLR3 Analogue
by the end of 2008 as requested by Ofcom.
EAB Annual Report 2009
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Local Loop Unbundling and IPstream
Scale: 100%
5.75m lines unbundled by March 2009 according to OTA2. There
remain some obligations with regards to the IPstream Connect
product in markets where BT has SMP and discussions on how this
product might evolve for next generation networks continue. During
2008/09, there was no specific obligation regarding the delivery of
EoI LLU products but there were two for IPstream Connect:
The Local Loop Unbundling (LLU) and IPstream portfolio enables BT
CPs and non-BT CPs to lease the local loop infrastructure from
Openreach to offer telephony and broadband services to end users.
As shown in the diagram below, IPstream products use LLU as an
input but include more of BT’s network and functionality in the
service. Some CPs purchase LLU from Openreach while others
purchase IPstream from BT Wholesale.
Openreach and BT Wholesale have delivered the majority of their EoI
obligations with regards to LLU and IPstream in previous years and
the EAO monitors that they remain compliant on an ongoing basis.
LLU is one of the Undertakings’ success stories with more than
IPstream Connect available for order (31 October 2008)
BT Wholesale met two deadlines regarding IPstream Connect during
2008/09. It met a milestone to make IPstream Connect available for
order by 31 October 2008 three months ahead of schedule. It also
migrated all existing IPstream customers to IPstream Connect ahead
of the due date of 31 March 2009.
LLU AND IPSTREAM PRODUCT PORTFOLIO
VOICE
NETWORK
BT LOCAL EXCHANGE
CP
DSLAM
BES
CP
NETWORK
MDF
LLU(MPF)
WWW
BT LOCAL EXCHANGE
voice
switch
MDF
LLU(SMPF)
CP
DSLAM
BT LOCAL EXCHANGE
IPStream
consuming
LLU(SMPF)
voice
switch
MDF
CP operated service
BT
TELEPHONY
NETWORK
Openreach operated service
BT
DSLAM
BES
CP
NETWORK
WWW
BT
TELEPHONY
NETWORK
BT DSL
NETWORK
BT Wholesale operated service
WWW
Customer wiring
The diagram at the bottom shows the IPstream product purchased by BT CPs. Non-BT CPs provide access to the Internet via their own data centres.
20
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Current generation products
LLU ongoing compliance
As a result of one of the EAO’s reviews of ongoing compliance, the EAB
agreed in November 2008 that there had been a non-trivial breach
regarding the ‘Local Loop Unbundling Customer Service Plan’ offered
by Openreach. The EAO had found that the plan available to BT
Wholesale differed from the standard plan offered to other CPs. The
plan offered to BT Wholesale contained a high level escalations e-mail
address and escalation cases made via this address were dealt with by a
dedicated team. Openreach published a revised version so that all CPs
were using the same plan and it disbanded the dedicated team.
Comparative CP performance indicators
Our view on LLU and IPstream Connect
LLU remains the Undertakings’ flagship product and its ongoing
success is important to both industry and Openreach. The EAB will
continue to review the operation of LLU to ensure that it is available on
an EoI basis. Related to this is the EAB’s audit of the exchanges where
LLU equipment is housed (for more information on the exchange audit
programme, see p26). IPstream Connect remains a crucial product for
CPs without their own large network infrastructure and for those
outside of the LLU footprint and the EAB will continue to monitor its
ongoing compliance through checks and reviews.
The KPIs are shown as line charts with one line representing the
product performance experienced by BT CPs and the other the
performance as experienced by non-BT CPs. If the two lines are
consistently different it is a potential indicator that there is an
equivalence issue. However there are several factors that can cause
differing performance and these don’t necessarily constitute a breach
of the Undertakings. Tests are also applied to assess whether any
difference is statistically significant. These factors are explained on a
product-by-product basis below for a selected number of KPIs.
The Ethernet product portfolio is diverse in order to meet the needs of
a wide range of CPs. It includes products such as Wholesale Extension
Service (WES) and Backhaul Extension Service (BES), which aggregate
traffic from non-BT CPs’ equipment in BT exchanges to CPs’ own core
networks. BT met the EoI obligations for Ethernet products in previous
years. However, through the introduction of a new EoI billing platform
Openreach found some differences regarding the billing of products to
BT and non-BT CPs. These differences were minor in respect of the
Ethernet portfolio and did not affect the equivalent provision of these
products. At the time this report was published, the EAB was validating
that BT had resolved the issue.
In 2008/09 BT began to develop Ethernet products for next
generation networks. For more information, see p29.
Other products and services
The EAB also monitors the compliant delivery of other products and
services listed in the Undertakings. During 2008/09 it found that BT
had delivered compliantly a number of products covered by
exemptions to the Undertakings including the ready for service date
for Featureline and the requirement for BT to provide the EAB and
Ofcom with progress reports on the Wavestream National product
after each migration. See p11 for more information on exemptions
and variations.
The EAB monitors all EoI products that have passed their delivery date
to ensure that they continue to be offered in an EoI way on an ongoing
basis. It does this through a series of compliance checks targeting areas
considered to be at risk. This year it checked Openreach’s ongoing
compliance with its LLU EoI obligations (see above for more
information). It also looked at product migration processes, fixed line
number portability, Openreach’s influence over the transmission layer
and backhaul assets, reallocation of Openreach assets, Openreach’s
Annual Operating Plan and product management in BT Wholesale. The
EAO did not raise any concerns as a result of this work, although the
The EAB assesses key performance indicators (KPIs) published by BT
showing the performance of BT’s EoI products. The KPI charts for
each product portfolio compare service provided to CPs within BT to
that for non-BT CPs.
WLR3 Analogue provision and repair
BT publishes KPIs for WLR3 Analogue provision and repair.
The chart below shows that Openreach has consistently completed a
higher percentage of WLR3 orders by the customer committed date
for BT CPs than it has for non-BT CPs.
WLR3 ANALOGUE PROVISION PERFORMANCE –
BASIC PRODUCT
100
95
% orders completed by
Customer Committed Date
Ethernet
compliance checks covering fixed-line number portability and
Openreach’s influence over the transmission layer and backhaul assets
were still in progress at the time this report was published.
90
85
80
Mar Apr May Jun
08 08 08 08
Non-BT CPs
Jul Aug Sep Oct Nov Dec Jan Feb Mar
08 08 08 08 08 08 09 09 09
BT CPs
The main reason for this appears to be that BT CPs have placed more
WLR3 orders than non-BT CPs and have therefore had the
opportunity to fine tune their order placement processes. BT CPs
have been the largest consumers of WLR3 since its launch in 2007.
During 2008/09 as new non-BT CPs started ordering WLR3 the
provision levels experienced by non-BT CPs dropped but by 31 March
the two lines had converged once more. Openreach believes that this
convergence occurred as non-BT CPs became more experienced in
placing orders for WLR3 and recent analysis has even shown that some
non-BT CPs are now experiencing better provision performance than
BT CPs. As a result the EAB believes that the higher provision levels for
EAB Annual Report 2009
21
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BT CPs shown on the chart may not indicate a non-equivalence issue
but it is continuing to keep the situation under close observation.
Scale: 100%
SMPF migration
SMPF LLU MIGRATION PERFORMANCE
The chart for WLR3 Analogue repair performance is not shown
because performance was similar for BT CPs and non-BT CPs
throughout the year.
For the WLR3 ISDN products, repair charts are not shown because
both WLR3 ISDN2 and WLR3 ISDN30 had met their RFS dates but
not their IBMC dates. In this situation the provision performance
must be on an EoI basis but not all of the repair activities.
LLU – SMPF provision and repair
BT publishes KPIs on provision and repair for the LLU products
Shared Metallic Path Facility (SMPF) and Metallic Path Facility (MPF).
SMPF PROVISION PERFORMANCE – BASIC PRODUCT
% orders completed by
Customer Committed Date
WLR3 ISDN2 and ISDN30 provision and repair
The provision charts for WLR3 ISDN2 and ISDN30 aren’t shown
because of low volumes. However, the provision performance for
WLR3 ISDN2 is broadly the same for BT and non-BT CPs although the
latter experienced slightly better performance for three months in the
early part of the year. With respect to the provision performance for
WLR3 ISDN30 the low volumes contributed to the volatility of the
performance with BT CPs appearing to experience a slightly better
performance to date. The EAB will continue to monitor both of these
situations in the coming year.
100
95
90
85
80
Mar Apr May Jun
08 08 08 08
Non-BT CPs
Jul Aug Sep Oct Nov Dec Jan Feb Mar
08 08 08 08 08 08 09 09 09
BT CPs
The chart above shows the percentage of orders that were completed
by Openreach by the customer committed date for migrating
customers to BT CPs compared to migrating to non-BT CPs. The chart
shows that performance has been broadly comparable for most of
the year as the migrations processes have reached maturity.
WES provision and repair
WHOLESALE EXTENSION SERVICES PROVISION
PERFORMANCE
100
100
95
% orders completed by
Customer Committed Date
% orders completed by
Customer Committed Date
95
90
85
80
Mar Apr May Jun
08 08 08 08
90
85
Jul Aug Sep Oct Nov Dec Jan Feb Mar
08 08 08 08 08 08 09 09 09
80
Non-BT CPs
BT CPs
The chart above shows that the proportion of orders for SMPF
completed by the customer committed date has been similar and
consistently high during 2008/09 for both BT CPs and non-BT CPs.
The EAB is satisfied that the small difference in the first couple of
months of the year did not show a significant failure of equivalence.
By March 2009 LLU SMPF repair performance was broadly
comparable for most of the year but slightly favouring BT CPs in the
last few months. This appears to be the result of BT CPs giving
Openreach a higher proportion of fault types which are relatively fast
to clear. At the time this report was published, further investigation is
under way into this matter. Additionally the provision performance
for MPF was broadly the same for both BT CPs and non-BT CPs and
there are too few repairs for MPF to make a valid comparison.
22
EAB Annual Report 2009
Mar Apr May Jun
08 08 08 08
Non-BT CPs
Jul Aug Sep Oct Nov Dec Jan Feb Mar
08 08 08 08 08 08 09 09 09
BT CPs
WES products have been available on an EoI basis since September
2006. The chart above shows that the percentage of orders that
Openreach has completed for BT and non-BT CPs by the customer
committed date has been similar. After performing statistical
analysis, the EAB is satisfied that all CPs are experiencing similar
performance despite BT appearing to experience slightly better
performance on occasions.
The chart on the next page shows the percentage of faults associated
with the WES product cleared by Openreach within five hours.
Openreach’s performance has also been equivalent in this area,
although it should be noted that the repair volumes are very small
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Current generation products
and thus the performance measures tend to fluctuate more than they
would for a product with large volumes.
WHOLESALE EXTENSION SERVICES REPAIR
PERFORMANCE
% fault reports cleared in objective time
100
The IPstream Connect repair results (not shown here) reflect a
marginally better performance for BT CPs but the difference is
smaller than for the provision results above.
95
90
85
80
Mar Apr May Jun
08 08 08 08
Jul Aug Sep Oct Nov Dec Jan Feb Mar
08 08 08 08 08 08 09 09 09
Non-BT CPs
BT CPs
By March 2009 the performance of BES and Wholesale End-to-End
Ethernet Service (WEES) as regards both provision and repair was
also broadly comparable for both BT CPs and non-BT CPs.
IPstream Connect provision and repair
IPSTREAM CONNECT PROVISION PERFORMANCE
100
95
% orders completed by
Customer Committed Date
success rate for provision within target timescales than other more
simple order types. For example there was a project run by a non-BT
CP to transfer its customers between two products in the IPstream
Connect portfolio. This type of transfer was a system-only change
that did not require engineering work and so was easier to provide on
time than other types of order. If the effect of the simultaneous
provide order type is excluded from the results, the number of orders
completed on time by BT Wholesale for BT CPs and non-BT CPs is
broadly similar.
Wholesale Broadband Connect (WBC) – provision and repair
WBC was launched during 2008/09 as part of BT’s 21CN product
portfolio and it enables CPs to provide broadband services to both
other service providers and end user customers. The EAB has begun
to track provision and repair for this product but currently the
volumes of orders are too low to enable significant statistical
analysis. More information on WBC will be included in the EAB’s
future reporting.
Our view on the product KPIs
The EAB is satisfied that the product KPIs for a range of EoI products
show that there are equivalent services on offer for BT CPs and nonBT CPs. Towards the end of 2008/09 the EAO identified an issue
regarding the timeliness of BT’s reporting of the KPIs and this was
being investigated at the time this report was published. Some EoI
products are reaching maturity and the KPI charts reflect the fact
that their performance largely falls within the agreed limits. For those
products where performance falls outside of the limits this can often
be explained by differences in types of orders placed by CPs. The EAB
will continue to monitor trends in this area in the coming year,
particularly with the launch of NGN products.
Our overall view on current generation
products
90
85
80
Apr
08
May
08
Jun
08
Jul
08
Non-BT CPs
Aug
08
Sep
08
Oct
08
Nov
08
Dec
08
Jan
09
Feb
09
Mar
09
The EAB is satisfied that equivalent products are on offer for BT and
non-BT CPs and it considers that Openreach and BT Wholesale are
committed to delivering EoI LLU and Ethernet current generation
products on an EoI basis. In particular Openreach must be
commended for its ongoing commitment to the EoI delivery of LLU.
However, providing the necessary product improvements to the WLR
and Ethernet portfolios to satisfy CPs is still some way off.
BT CPs
The IPstream Connect product allows CPs to interconnect with BT’s
network. The chart above shows that BT Wholesale has consistently
provided IPstream Connect orders on time for a higher percentage of
orders from non-BT CPs than it has for orders from BT CPs. However
by March 2009, these two lines had converged and BT Wholesale
was completing a similar percentage of orders for both sets of CPs.
Analysis shows that the difference throughout the year can be
attributed to the relative complexity of the orders. BT CPs have a
higher proportion of ‘simultaneous provide’ orders where telephony
and broadband are provided at the same time. These types of orders
are generally more complicated to fulfil and therefore have a lower
The WLR obligations in the Undertakings have continued to be
challenging for BT and Openreach to deliver during 2008/09 and
complications related to the underlying systems work make it
unlikely that the future deadlines will be met. Ofcom’s review of
these future obligations was still under way at the time this report
was approved but the EAB expects Openreach to continue to provide
high service standards for those already using WLR3 while working
towards the earliest achievable deadline. The EAB will also continue
to monitor BT’s ongoing compliance with those products already
delivered on an EoI basis so that it can maintain an overall view of
equivalence in the current generation product portfolio.
EAB Annual Report 2009
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Systems and assets
A wide range of BT’s systems and other assets play an important role in helping the
company to deliver its Undertakings’ obligations. These include the operational
support systems underpinning BT’s delivery of equivalent products and services. They
also include physical assets such as BT’s exchanges which support the delivery of EoI
products such as LLU.
The EAB has a particular role with regards to monitoring that access
to certain systems and assets is appropriately controlled to ensure
that BT does not obtain an advantage from preferential access. In
2008/09 this involved overseeing that BT made progress towards
separation of its Operational Support Systems (OSS). The EAB also
tracked the performance of the EMP as this plays an important role in
the delivery of EoI products such as WLR3. This year, the EAB also
gained the additional responsibility of auditing the provision of
exchange space.
Systems separation
The EAB oversees that Openreach and the other lines of business are
compliantly accessing OSS and Management Information Systems
(MIS). These are large and complex systems containing tens of
millions of customer records and there have been a number of
deadlines over the past few years (see timeline below).
What are MIS?
MIS are defined within the Undertakings as “those which hold
Commercial Information and/or Customer Confidential Information
which are used by BT to help plan and direct business and
organisational operations”. The Undertakings require BT to ‘logically’
separate its MIS at two incremental levels:
Level one: the application of access rights and controls to ensure
that users have access only to the data to which they are entitled
Level two: separation of systems data and separate versions of the
application software so that users are confined by their access rights.
All but a specific subset of MIS had to achieve level two separation by
22 October 2006. The subset were to have a ‘roadmap’ that BT
successfully published in 2007 as required, setting out its plans to
implement the second level of separation for these remaining
systems by 30 June 2010.
What are OSS?
OSS are defined in the Undertakings as “those support systems
carrying out the functions and processes which help to run a network
and business, including… pre-ordering, taking a customer’s order,
configuring network components, creating a bill and managing faults”.
2006/2007
2007/2008
2008/2009
2009/2010
Management Information Systems
logical separation
Operational systems separation –
user access controls (phase 1)
OSS separation – user access
controls (phase 2)
Separate OSS for WLR manual
exception tasks
MIS roadmap
50% of customer-side
records migrated to physically
separate OSS
50% of supply-side records migrated
OSS separation – user access
controls (phase 3)
90% of relevant customer-side
records migrated to physically
separate OSS
90% of non-WLR supply-side
records migrated to physically
separate OSS for WLR manual
exception tasks
90% of users migrated to physically
separate OSS for WLR manual
exception tasks
OSS physical separation
MIS Level 2 separation
24
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Systems and assets
The Undertakings require that OSS are physically separated. This
involves separating a large number of the systems used by
Openreach from those used by the rest of BT so that confidential
information can’t be shared inappropriately across organisational
boundaries. The Undertakings require eventual full physical
separation of OSS by 2010 although this date is currently under
review by Ofcom. Physical separation is to be preceded by the
‘logical’ separation of systems which involves the creation of user
access controls, to limit users from gaining access to parts of the
system containing restricted data.
‘Logical’ separation milestones
The EAB has monitored BT’s implementation of ‘logical’ separation
over the past few years. In its 2006/07 annual report the EAB
concluded that BT had logically separated its MIS.
In its 2007/08 annual report it covered the logical separation of OSS
systems supporting the EoI products of WLR Analogue, MPF and
SMPF, WLR ISDN2 and WLR ISDN30. During 2007 Ofcom also agreed
a variation to the Undertakings to introduce some additional interim
milestones.
As reported in last year’s annual report, the EAB audited BT’s
introduction of user access controls for the 20 ‘supply-side’ OSS –
such as those for network maintenance and job allocation –
underpinning the EoI WLR Analogue, WLR ISDN2 and LLU products.
It found a single example of an access control that had been
ineffectively applied to one of the systems resulting in a trivial breach
of the Undertakings.
In addition to the EAO’s work, Ofcom also required that the logical
separation of the MIS and OSS supporting the EoI WLR and LLU
products should be subject to an independent external audit. To fulfil
this obligation the EAB commissioned a series of independent
assurance reports from PricewaterhouseCoopers LLP (PwC)1. These
were completed in three stages to reflect the phasing of the
milestone implementation dates. The findings of the work on MIS
separation and the first stage of the work in respect of OSS
separation addressing the EoI LLU, WLR3 Analogue and WLR3 ISDN2
products were reported in prior EAB annual reports.
The second stage of PwC’s work focused on user access controls for
systems supporting the EoI WLR ISDN30 product which needed to be
in place by February 2008. The assurance opinion highlighted
potential incidents of non-compliance in six out of the 13 systems
which were investigated by the EAO. The EAO’s review established
that some systems’ errors meant that controls had been
compromised until the problems were fixed by May 2008 (although
during this period there were no live customer orders in the system).
The EAB considered this to be a trivial breach of the Undertakings.
The Undertakings also require that in advance of full physical
separation, the ongoing application of user access controls applied to
relevant OSS should be subject to a further independent external
audit. Due to the previous incidents of non-compliance the EAB
decided to bring forward the third stage of PWC’s work. The scope was
agreed with the EAO during 2008/09 and included sample testing of
28 OSS affected by the obligation to apply user access controls. The
EAO’s audit work combined with that of PwC led the EAB to conclude
that the user access controls were operating effectively.
‘Logical’ separation – ongoing compliance
Not only must user access controls within a system be effective, but
also the management controls around the assignment of access
privileges to individual users. During 2008/09 the EAB reviewed
various aspects of information sharing boundaries in BT Design and
BT Operate, including the assignment of access privileges. Whilst
there were management controls already in place in both
organisations, the EAB found that they should both implement
improvements to tighten the controls and make them more robust
particularly for users within high risk teams. These controls should
remain in place until systems separation or other automated
processes make them redundant.
‘Physical’ separation of OSS
BT met the requirement to move 50% of ‘customer side’ records to
physically separate OSS by 30 November 2008. The previously
achieved IBMC milestones for IPstream and LLU meant that
customer-side records were held on physically separate systems from
the outset. As work towards the remaining IBMC milestones
continues, all records will therefore be held in this way. At the time
this report was approved, Ofcom was reviewing the future
obligations regarding physical separation (for more information,
see p12).
Our view on systems separation
The EAB is of the opinion that the consequence of any delays to or
non-compliance with physical separation obligations is minimal
because logical separation, through user access controls, already
provides most of the control required.
There is a particularly difficult balance for BT to consider if focusing
resources on the introduction of physical controls compromises
customer service quality. After all, many global organisations
maintain adequate safeguards against users accessing information
they are not authorised to through the application of software
controls. Based on the findings of the EAB’s own audit activity,
including the most recent audit this year by PwC, there is good
evidence that the controls are continuing to work effectively. Regular
independent review of the ongoing application of these should
maintain adequate safeguards against users accessing information
they are not authorised to.
Equivalence Management Platform
The EMP is the ‘strategic’ OSS designed to handle the majority of
transactions for EoI products such as LLU and WLR. Operated by
Openreach, it replaces the ‘tactical’ systems that pre-date the
Undertakings and which were not designed originally to handle all
end user orders in an equivalent way.
1
PricewaterhouseCoopers LLP (“PwC”) will permit the disclosure of its reports, to
communications providers regulated by Ofcom subject to prior receipt of a hold harmless
letter (in a form specified by PwC) under which the communications provider agrees and
acknowledges, inter alia, that PwC, its members, partners, employees and agents neither
owe or accept responsibility to such third party.
The Undertakings do not require the EAB to monitor the
performance of the EMP in its own right. However, as the platform
underpins Openreach’s delivery of its EoI product milestones and
EAB Annual Report 2009
25
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ongoing EoI compliance after those milestones have been achieved,
it remains an important factor in the EAB’s product validations.
As noted in last year’s Annual Report, the poor service levels on the
EMP were a serious concern for the EAB, particularly the capability of
the strategic platform to support WLR3 customers. These service
performance issues have now been resolved and the EAB is satisfied
that Openreach has overcome some of the challenges associated
with balancing service performance with its EoI obligations.
Even though service levels on the EMP have improved significantly,
OTA2 reports that a number of CPs are still facing difficulties
regarding functionality offered via the EMP. OTA2 reports that CPs
are frustrated that functionality is not deployed quickly enough to fit
in with their plans and Openreach is concerned that the functionality
on offer is not consumed in a timely manner by CPs. OTA2 is hoping
that future upgrades to the EMP will resolve some of the remaining
issues. The next major EMP release will be R1100, which is due in
summer 2009.
The EAB will continue to play close attention to how the EMP’s
functionality affects EoI product delivery. In 2008/09 it agreed that
there was a non-trivial breach regarding a service on the EMP that
allows CPs to test their systems’ interfaces with the EMP. This testing
service was supplied to the rest of BT but was not available to non-BT
CPs. Openreach planned to resolve the problem by making the same
EoI test facility available to all CPs, but feedback from CPs led to
some amendments and an EoI pilot was launched in January 2009.
At the time this report was published Openreach was monitoring the
success of the product before deciding on whether to launch it
commercially.
Our view on the EMP
The EMP’s reliability has improved significantly and functionality has
increased. However, the bottleneck on the EMP – which is delaying
the developments sought by CPs – is requiring the EAB’s close
attention.
Exchange space and power
Space in BT’s local exchanges is an important part of the
infrastructure supporting the delivery of the Undertakings as it is one
of the ways in which CPs can house the equipment which forms part
of EoI services such as LLU. BT Operate manages the local exchanges
which house the local access nodes operated by Openreach.
In October 2008, BT and Ofcom agreed a variation in response to
CPs’ concerns that they had difficulty in reserving space in BT
exchanges. The variation required BT to publish guidelines for the
process of allocating exchange space and power used in relation to
Openreach’s SMPF LLU and Ethernet products and conduct a
proactive review of exchanges with a view to freeing up space. It also
needed to develop and launch a space-only allocation product on an
EoI basis and review the scope of the existing LLU co-mingling
product to allow more flexible use of exchange space. Finally, the
variation required the EAB to carry out regular audits of exchange
space and review allocation processes focusing on those main
distribution frames where space was constrained.
26
EAB Annual Report 2009
Scale: 100%
The EAO supported by BT’s Regulatory Compliance team visited 40
randomly selected exchanges as part of the audit. It found that, on
the whole, EoI processes were already in operation for allocating
space within exchanges, even though – prior to the above variation –
space did not need to be allocated on an EoI basis.
The EAO found that the legacy process for BT to investigate space
requests from CPs was not as effective as it could have been and may
have led to perceptions that there were issues with space allocation.
From 31 March 2009 onwards the EAB is pleased to see that
Openreach will use a new space allocation process which appears to
be more effective and overcomes several shortcomings in the legacy
process.
The EAB has asked the EAO to revisit the new process in 2009/10 to
check that it has led to improvements in the way that space is
allocated. It will also monitor that space reserved for BT’s 21CN
equipment and for CPs who are not actively using their allocation is
reassigned if new orders are received.
Our view on exchange space availability
The EAB is satisfied that BT is allocating exchange space on an EoI
basis although it remains a priority to tackle existing exchange space
issues as 21CN roll-out picks up pace. The EAB will continue to
monitor exchange space and report on its findings in its regular news
updates.
Our overall view on systems and assets
The EAB is satisfied that BT is operating its systems and assets in a
compliant manner and that EoI services are widely available to BT CPs
and non-BT CPs. It will continue to monitor information boundaries
and user access controls for some systems in the coming year. It will
also continue with proactive audits of BT Operate’s exchanges.
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“The roll out of next generation access
networks are of crucial importance to
the future of broadband. Proactive
consultation with industry is vital in
driving this forward”
HUW SAUNDERS, GROUP REGULATORY AFFAIRS AND TECHNOLOGY
DEVELOPMENT DIRECTOR, KCOM
EAB Annual Report 2009
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Next generation
networks and access
Next generation networks and access are seen as the enablers for future high capacity
broadband services. At the time this report was published there was much commercial
and regulatory activity relating to these technologies.
BT’s next generation backbone network – known as ‘21st Century
network’ (21CN) – is a large-scale project to increase capacity and
network capability across the UK. The Undertakings require BT to
offer NGN products (which it does via 21CN) on an EoI basis where
the company has SMP. The Undertakings also contain other
requirements for NGN – such as obligations around consulting with
industry – that BT must fulfil.
Next Generation Access (NGA) involves increasing the capacity of the
local access network so that it can support high speed Internet and
other high bandwidth products. During 2008/09 there were no
specific NGA obligations in the Undertakings, but the generic
obligations upon Openreach – including product equivalence and
information sharing restrictions – still applied. The EAB has
developed monitoring processes for both NGN and NGA and these
are described in the next few pages. At the time this report was
agreed Ofcom was consulting on a proposed variation to the
Undertakings regarding Fibre-to-the-Cabinet and this may involve
further monitoring obligations for the EAB.
BT’s next generation network
BT’s next generation 21st Century Network (21CN) programme is
managed by BT Design while BT Wholesale and Openreach also
supply various 21CN products. 21CN encompasses the backhaul and
core network as shown in the diagram below. The local access
network is not upgraded as part of the 21CN programme (see section
on Next Generation Access on p30).
The Undertakings regarding NGN (and therefore BT’s 21CN
programme) do not have specific dates for EoI product launch like
those for the current generation of products and supporting systems.
Instead, where BT has SMP, NGN products must be delivered on an
EoI basis from launch, on dates notified in advance by BT. There are
also requirements regarding the design and delivery of the
underlying NGN infrastructure, consultation with industry and the
provision of compensation arrangements associated with some NGN
products.
NGN
ACCESS NETWORK
21CN/NGN
LOCAL
EXCHANGE
28
EAB Annual Report 2009
OPENREACH NETWORK
BACKHAUL SERVICE (ONBS)
METRO
NODE
(MAIN
EXCHANGE)
ETHERNET BACKHAUL
DIRECT (EBD)
OPENREACH
HANDOVER
POINT
BT’S CORE
NETWORK
M
IN ULT
TE IRC SE
ON RV
NE ICE
CT
LI
NK
(M
SIL
)
BULK TRANSPORT LINK (BTL)
CP
NETWORK
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Next generation networks and access
In 2008 the Undertakings were varied to include a further obligation
for BT to publish an NGN ‘plan of record’ – which charts BT’s progress
in the delivery programme – on a quarterly basis. It was also required
to publish the principles that BT must follow for consultations related
to its NGN programme.
BT made progress during the year in terms of its NGN roll out. During
2008/09 it completed the build of its core network and continued
with the 21CN ‘Pathfinder’ trial in South Wales which is a precursor to
the full 21CN roll out. However the year has also seen two significant
strategy reviews.
In May 2008 BT published an update on its NGN strategy which
included a new set of priorities for the programme focusing on the
delivery of 21CN broadband services. These included prioritising the
delivery of new services rather than replicating old ones and
providing extended periods for voluntary customer upgrades to new
services. The second review in December 2008 involved a change to
the voice strategy for NGN. See below for more information.
The EAB has developed a ‘principles-based’ approach to monitoring
BT’s NGN obligations which involves assessing performance in a
range of areas. The EAB also monitors that NGN products were
delivered on an EoI basis where required. Progress in each thematic
area during 2008/09 is as follows:
Provision of network access on an EoI basis
BT must ensure that, where it has SMP, network access products
provided over its NGN are offered on an EoI basis from launch,
although this does not apply to all products.
BT launched a number of SMP next generation network products on
an EoI basis during 2008/09. The first of these was 1Gbit MultiService Interconnect Link (MSIL) which interconnects CP networks
with BT’s 21CN. The EAB confirmed that BT had offered this product
on an EoI basis, although this was achieved in part using a ‘tactical’
operational support system. The EAB also confirmed that BT had
delivered the higher capacity 10Gbit MSIL product on an EoI basis.
Openreach also launched two 21CN Ethernet products: Ethernet
Backhaul Direct (EBD) and Bulk Transport Link (BTL). The EAB
confirmed that these were launched on an EoI basis.
Following the launch of these products the EAO received a multiparty complaint regarding service level agreements for both
products. The EAO investigated the complaint and found an issue
that the EAB considered to be a trivial breach of the Undertakings.
For more information on the complaint, see p41.
BT Wholesale also launched Wholesale Broadband Connect (WBC)
which enables CPs to provide broadband services to both service
providers and end user customers and has the capability for future
voice services to be integrated. The EAB confirmed that WBC was
launched on an EoI basis but noted that at the time of launch there
were some concerns not related to the Undertakings – in particular a
perceived lack of consultation regarding the development of the
product. The EAB will conduct ongoing reviews to check that WBC is
offered on an EoI basis.
There were a number of developments in terms of the design of voice
services via the 21CN platform during 2008/09. BT Wholesale had
been developing two NGN products with voice capabilities: a
converged voice and broadband product called Wholesale
Broadband Connect Converged (WBCC) and a voice only product to
be known as Wholesale Voice Connect (WVC). Prior to this,
Openreach had also planned to develop a voice product known as
Voice Line Access (VLA) although in November 2008 it announced to
industry that it would instead concentrate on making WLR3
operational on NGN (see p18 for more information on WLR3).
In December 2008 BT Wholesale announced that further
development of the WBCC and WVC services was suspended as it felt
that the commercial case for neither product was compelling. It
emphasised that it remained committed to the future delivery of
21CN voice products and that it would continue to engage with
industry regarding its voice requirements. WLR3 is therefore the only
large scale voice product still in development for deployment over
BT’s NGN. The EAB will continue to closely monitor that any new
voice products are developed and offered on an an EoI basis.
No foreclosure of network access
BT must ensure that non-BT CPs can purchase SMP products using
its 21CN infrastructure and on terms that allow them to compete
effectively with BT’s end-to-end services provided over 21CN.
The company must ensure that it does not take design decisions
that would preclude the above obligations without industry
consultation.
The EAB is satisfied that non-BT CPs have been able to purchase
21CN products that enable them to compete effectively with BT’s
end-to-end services throughout 2008/09. The EAO has observed
that the Consult21 programme is functioning well and that CPs are
fully engaged in all decisions. However any changes in the
development of voice products may reopen issues around foreclosure
of network access that had been resolved previously. The EAB will
continue to monitor progress in this area and will also consider how
this could affect the other thematic areas in its monitoring
programme, such as compensation arrangements.
Charges based on efficient design
The Undertakings state that where BT’s network access charges are
required to be on a cost-orientated basis by SMP obligations, the
costs should be what BT would have reasonably incurred had the
company designed and built its NGN in the most efficient manner.
There are also some exceptions to this obligation regarding further
changes that could be made by Ofcom via charge controls or through
consultation with industry.
BT has stated that its obligation to charge on the basis of efficient
design will be discharged via consultation for relevant products and
by using ‘least cost charging’ for SMP products. Non-BT CPs have
told the EAO that they are satisfied with the way that they have been
consulted on technical issues by BT, and the EAO will monitor that
commercial issues such as charges based on efficient design are
consulted on in the same proactive way.
NGN implementation
The Undertakings allow for BT’s lines of business to cooperate with
each other to carry out the design, build and implementation of the
EAB Annual Report 2009
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company’s NGN. The EAB is satisfied that it has good oversight of
BT’s implementation of 21CN. BT has published the plan of record, a
non-binding roadmap and key datasets effectively and in the
timescales required by the Undertakings.
Progress against other themes
The Undertakings state that BT must participate in any industry
group established by Ofcom to agree aspects of the move towards
21CN. BT participates in the industry group NGNuk which was set up
by Ofcom. The EAB is also satisfied that the industry group
established by BT – Consult21 – is working well and those attending
are fully engaged although it is aware that attending the frequent
sessions can be a major commitment for CPs. The EAB has
recommended that BT communicate the explanation behind
decisions on 21CN products and services in a transparent way as
some CPs have expressed concern that the outcomes from
consultations can appear to be predetermined.
During 2008/09 there were no issues with regards to two other
themes: provision of network access on a timely basis or with regards
to broadband dialtone, a software control that BT could potentially
use via its 21CN to enable connections. Also there has been no need
to establish an operational dispute adjudicator to look at 21CN
during the year.
Additionally, as part of its ongoing compliance work the EAB
conducted a detailed review of BT’s 21CN governance framework
and the associated processes and controls. The framework comprises
leadership, delivery and external affairs teams to liaise with key
stakeholders. Together, these bodies oversee the compliant launch of
new 21CN products, services, processes and platforms.
The review found that a comprehensive framework had been put in
place to address the Undertakings’ requirements but that it was too
early to test how effectively it was working in practice. The
appointment of a 21CN compliance champion with responsibility for
compliance monitoring was noted as an especially positive
development. However, the EAB highlighted that there was scope to
improve the transparency of design decisions to allay any industry
concerns that BT had pre-determined outcomes which could lead to
future claims of network foreclosure.
Our view on NGN
BT’s NGN programme is functioning effectively from an
Undertakings’ perspective. The EAB is satisfied that BT has complied
with its EoI obligations with regards to the launch of NGN products
although delays to the development of NGN voice products remain a
concern. The EAB considers that Consult21 is functioning well
although BT must continue to engage with industry on future
product development. The EAB will continue to monitor progress in
this area in the coming year.
Next Generation Access
NGA rose in prominence in 2008/09 as BT announced that it was
planning to roll out a fibre-based, ‘super-fast’ broadband to
approximately 10m homes in the UK by December 2012 subject to a
supportive regulatory environment. It said that the £1.5bn
30
EAB Annual Report 2009
Scale: 100%
programme will deliver a range of services with top speeds of up to
100MB.
Openreach is considering a ‘mixed economy’ approach to NGA. This
includes both ‘Fibre-to-the-Premises’ (FTTP) – typically used in new
build developments – and ‘Fibre-to-the-Cabinet’ (FTTC) which could
be deployed at brownfield sites (see diagram on p31). BT has already
rolled out FTTP at the new-build housing development at Ebbsfleet
in Kent and Ofcom concluded a consultation on the regulatory
environment for new build developments during the year.
Ofcom also opened a consultation on NGA in 2008: “Future
Broadband – policy approach to Next Generation Access”. In March
2009 it followed this up with a policy statement entitled: “Delivering
super-fast broadband in the UK: setting the right policy framework”.
Its objectives included:
Minimising unnecessary inefficiencies in network design and build
as a result of regulatory policies, while continuing to protect the
consumer interest
Supporting the use of new, more flexible wholesale services by BT
to offer super-fast services to other service providers and
consumers at competitive prices
Safeguarding the opportunity for further competition based on
physical infrastructure by facilitating fair opportunities for
companies to synchronise their investments with BT’s
deployments and encouraging network design that takes future
potential competition into account.
Ofcom said that to fulfil these objectives it was necessary to consult
on a related change to the Undertakings. The consultation – on
which Ofcom was considering its conclusions at the time this report
was agreed – seeks views on a variation to the Undertakings
regarding BT’s proposed investment in FTTC technology which
requires electronic equipment to be located in street cabinets. If
agreed the variation would allow Openreach to control and operate
the electronic equipment necessary to provide super-fast broadband
using FTTC. The Undertakings currently do not allow Openreach to
control and operate electronic equipment in BT’s access or backhaul
network.
The EAB’s approach to NGA
The EAB’s role with regards to NGA is still developing and will depend
in part on the outcome of Ofcom’s consultation and the network
investment decisions made by BT. During 2008/09 there were no
specific NGA obligations in the Undertakings, but the generic
obligations upon Openreach – including product equivalence and
information sharing restrictions – still applied.
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Next generation networks and access
Next Generation Access technologies
NGA: FIBRE TO THE PREMISE
FTTP (DEDICATED)
SPLITTER
LOCAL
EXCHANGE
FTTP GIGABIT PASSIVE OPTICAL NETWORK (SHARED)
NGA: FIBRE TO THE CABINET
EXIST
ING C
OPPE
R
EXISTING COPPER
LOCAL
EXCHANGE
EXISTING
CABINET
LINKING
COPPER
NEW
CABINET
FTTC
POWER
Copper
Fibre
EAB Annual Report 2009
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In July 2008 the EAB developed an approach based on these more
general themes. The EAO checked all existing Undertakings’ clauses
to understand whether they were required to be applied to NGA. It
also reflected on its reviews of compliance to consider where there
could be other relevant areas for consideration. It developed a
monitoring approach with the following key themes:
NGA THEME
BT ACTIVITY
Consultation
and
engagement
Openreach consults with industry in a similar way
to BT’s consultations on its NGN products
(see p30).
Products
and systems
Products are designed, launched and CPs’ users
migrated to the new product on an EoI basis.
OSS underpinning the new EoI products are either
separated or have user access controls in place.
Equipment
and locations
NGA solutions are not made unattractive to CPs
either because of cost or availability of equipment,
space or power.
Backhaul
The NGA product does not preclude or dictate the
choice of backhaul for CPs or make the product
commercially unattractive because of the cost or
limitations of the backhaul solution.
Governance
A range of obligations including the use of
statement of requirements processes on the same
basis for all CPs, appropriate sharing of customer
confidential and commercial information and all
transactions to be carried out on an EoI basis.
Since it began monitoring progress in this area in July 2008, the EAB
has observed the following progress under each thematic area:
Consultation and engagement
The EAB considers that Openreach has made significant progress in
this area even though it had no formal obligation to consult on NGA
at the time this report was published. Openreach’s primary industry
group for debating NGA – the Openreach NGA Forum – meets every
other month and some of the supporting working groups meet more
frequently if required. Openreach has also attended workshops on
NGA run by Ofcom.
Products and systems
The EAB has confirmed that the first NGA product – Generic Ethernet
Access (GEA) – was delivered on an EoI basis. GEA offers assured
broadband speeds over FTTP connections. However at the time of
the validation only BT Retail had bought GEA and it was not therefore
possible to validate that migrations to the product were occurring
equivalently.
Equipment and locations
The NGA development at Ebbsfleet uses existing Openreach
exchange space and power. The EAB is satisfied that EoI services are
available at this development but will monitor that EoI exchange
space continues to be offered equivalently if NGA deployment
becomes more widespread and moves into areas where there are
limitations on exchange space.
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EAB Annual Report 2009
Scale: 100%
Backhaul
The FTTP trial at Ebbsfleet uses current generation Openreach
backhaul products which are deployed on an EoI basis. During
2008/09, the EAB had no significant concerns that backhaul
availability could unfairly restrict the development or adoption of
NGA products.
Governance
The EAB is satisfied that the governance measures in place regarding
NGA are functioning well although it notes that there are potential
issues around the timing of when variations are granted and when
work needs to commence. It will continue to monitor these measures
as the strategy for NGA evolves.
Our view on NGA
During 2008/09, aside from the potential governance issues above,
BT complied in the main with the more generic Undertakings’
obligations that can be applied to NGA. The EAB will continue to
evolve its approach to monitoring NGA once the consultation reaches
its conclusion.
Our overall conclusion on NGN and NGA
During 2008/09, BT and Openreach have complied with the EoI
obligations regarding NGN and the more generic Undertakings’
obligations that can be applied to the first NGA products. Both
Openreach and BT Wholesale have worked hard to engage with
industry and factor in concerns when developing products even if
this does not always result in a solution that can satisfy all CPs.
However, the strategy review regarding the 21CN voice products has
caused uncertainty and concern. The EAB will continue to closely
monitor that any new voice products are developed and offered on
an EoI basis. It will also continue to develop its approach to
monitoring NGA once Ofcom’s consultation on FTTC is concluded.
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“The principles set out in the
Undertakings are central to the way
that BT does business. We remain
committed to ensuring that our
employees comply with the
Undertakings in their day-to-day
roles”
EMMA GILTHORPE, GROUP DIRECTOR INDUSTRY POLICY AND
REGULATION, BT
EAB Annual Report 2009
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Behavioural change
BT employees must comply with the Undertakings in the way that they behave when
working with colleagues and dealing with customers. However ensuring that
equivalence is applied across all lines of business and is embedded in a wide range of
processes is a complex and ongoing task. The EAB monitors BT’s progress towards
encouraging Undertakings-related behavioural change.
During 2007/08 the EAO and BT worked together to develop a
dashboard for monitoring behavioural change. This uses a matrixbased approach to track behavioural change in three areas: ‘abiding
by the rules’, ‘industry trust’ and ‘customer satisfaction’. Each of
these areas has three categories for measuring change: ‘product’,
‘processes and systems’ and ‘people’. The EAO has continued to
apply this approach during 2008/09 and has found progress across
all categories, although there are some areas where BT continues to
find it challenging to meet pre-agreed targets. A description of
developments during 2008/09 in the three categories for measuring
change can be found below.
Abiding by the rules
CODE OF PRACTICE TRAINING COMPLETIONS
100
90
80
70
60
50
40
30
20
10
0
One of the first steps in helping people to abide by the rules
associated with the Undertakings was to introduce appropriate
training to assist people in understanding their obligations. BT
undertakes a range of training initiatives to ensure that employees
can behave compliantly when working with colleagues and
customers.
One of the most important of these is the Code of Practice which was
introduced by BT soon after the Undertakings were agreed. The aim
of the Code is to offer guidance on how to behave compliantly in a
range of circumstances and across a range of job functions. The EAB
uses the rate of completion of the Code of Practice training as an
indicator of potential behavioural change.
Contractors (high risk)
2006/07
Managers
2007/08
Team Members
2008/09
Source: BT
The chart shows that Code of Practice completion rate for managers
is above the target of 95% and the totals for team members and high
risk contractors are also above the 90% target. BT has continued to
ensure that the Code of Practice takes account of changes in the
organisation. In April 2008 it published a new version of the Code
to reflect the creation of BT Design and BT Operate and new
information sharing rules. It also launched a new computer-based
training package for this version of the Code in June 2008. The EAB
will continue to monitor that these high completion rates for a large
number of employees are carried forward.
The EAB has encouraged BT to carry out more tailored training for
individuals so that they understand how compliance can be applied
in their daily roles. The company already includes supplementary
tailored sections for each line of business in its mandatory training on
the Undertakings. During 2007/08 Openreach launched the ‘Living
the Spirit’ programme to further embed equivalent behaviour in the
way that its employees work. This financial year as part of the
programme, it delivered face-to-face equivalence seminars for some
new managers joining Openreach and for those joining other parts of
BT which support Openreach. It also launched an equivalence
‘teaser’ campaign which included articles on equivalence in
Openreach’s employee newsletter and the development of an online
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Behavioural change
equivalence archive. The programme also developed telephonebased compliance training for engineers in Openreach and BT Ireland
(North) and a ‘train the trainer’ scheme.
Other BT lines of business have also launched tailored equivalence
training. BT Global Services is ensuring that tailored training is
delivered to its high risk teams, while BT Design and BT Operate have
improved the classification of restricted teams and the information
sharing processes associated with them and have developed training
targeting these teams. BT Wholesale has continued to monitor
uptake closely through surveys and internal audits and it ran a
programme of interactive scenario-based training tailored to several
business units including product management, customer service and
finance. By November 2008, 87% of BT Wholesale employees said
that they were very or completely confident that they were fully
compliant with equivalence guidelines.
The EAB is satisfied that BT is continuing to focus on ensuring that
appropriate training is in place regarding equivalence. It continues to
believe that tailored training is one of the most effective ways of
targeting high risk employees and it expects to see BT continue to
maintain high totals for training completions.
Compliant use of processes and systems
Another area measured by the dashboard is how well employees abide
by the rules in their day-to-day use of processes and systems. A key
issue is ‘peripheral vision’ where call centre agents within BT Retail and
BT Global Services could have the opportunity to see and use
inappropriate information because they have access to multiple
systems. Nearly all of these potential infringements are blocked by
system controls before they can constitute non-compliance. However
the number of non-compliant peripheral vision incidents recorded is a
useful indicator of employee behaviour with regards to systems usage.
The chart below shows that there were a high number of incidents
during 2007/08 regarding non-compliant user access for the OSS for
IPstream and WLR3 Analogue but that these had reduced to almost
zero in 2008/09. Very small numbers of WLR3 ISDN2 and WLR3
ISDN30 incidences continued to occur in 2008/09 and these
continue to decrease. Analysis has shown that some of these
incidents were often the result of employees retaining user access
privileges from their previous job roles when moving into a new
position or incorrect identification of new end users. In February
2009, the EAB completed a review of the information sharing
boundaries in BT Operate and BT Design and made a number of
recommendations regarding how these could be improved to limit
the opportunities for non-compliant access to restricted systems. For
more information, see p44.
The EAB will continue to monitor peripheral vision as a useful
indicator of compliant employee behaviour and as a sign of the
effectiveness of user access controls in the run up to full physical
separation of operational support systems. For more information
about operational support systems, see p25.
IPSTREAM, WLR3, ISDN30 AND ISDN2: NUMBER OF CASES OF NON-COMPLIANT BEHAVIOUR
2050
2021
459
200
283
180
160
140
120
100
80
60
40
20
00
Q1 07/08
IPStream
Q2 07/08
Q3 07/08
WLR3 Analogue
Q4 07/08
Q1 08/09
WLR3 ISDN30
Q2 08/09
Q3 08/09
Q4 08/09
WLR3 ISDN2
Source: BT
EAB Annual Report 2009
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Industry trust
BT WHOLESALE SoR VOLUMES
Statement of Requirement requests
BT CPs and non-BT CPs must use the Statement of Requirements
(SoR) process to request a change to Openreach or BT Wholesale
products and their attributes. The process applies to products defined
as having SMP and Openreach and BT Wholesale are required to
respond to SoR requests within set timescales.
The dashboard compares data on the number of SoR requests from
BT CPs and non-BT CPs that are accepted or rejected – as well as
those delivered – by Openreach and BT Wholesale. There are many
ways in which this data can be interpreted but the two main
indicators of industry trust are the number of requests submitted – a
large number possibly showing trust in the process – and the second
testing whether there are significant differences in the number of
requests from BT CPs and non-BT CPs that are accepted or rejected.
The chart below shows that during 2008/09 Openreach received a
higher number of SoRs from BT CPs than those from non-BT CPs and
it rejected SoRs in similar proportion. Compared to the proportion
submitted, non-BT CPs have more SoRs than expected still pending
an accept/reject decision, while BT CPs have more than expected that
have been accepted but not yet delivered. Nonetheless Openreach
had delivered only two SoRs – one for each type of CP.
OPENREACH SoR VOLUMES
100%
21
7
1
28
12
90%
100%
71
8
39
3
21
90%
80%
70%
SoR volumes
Maintaining industry trust that EoI products are on offer and that
BT employees are behaving compliantly is crucial to the success of
the Undertakings. The dashboard includes measures on industry trust
such as levels of Openreach brand awareness among CP customers
and the number of requests Openreach and BT Wholesale accepted
or rejected from BT and non-BT CPs.
60%
50%
3
40%
30%
27
38
3
20%
5
10%
0%
Submitted
Pending
Rejected
Accepted*
Delivered
*Accepted but not yet delivered
Non-BT CPs
BT CPs
Source: BT
The specific nature of individual SoRs can vary greatly and as a result
it is not easy to draw conclusions on the top level numbers without
further analysis. However the numbers indicate that non-BT CPs are
not being unfairly discriminated against in the delivery of SoRs
compared with BT CPs.
Openreach brand awareness
Another way in which the dashboard measures industry trust is by
assessing awareness of the Openreach brand among customers. The
chart below shows awareness of the Openreach brand among
customers over the past three and a half years since the Undertakings
were agreed. It shows that awareness of the Openreach brand has
increased gradually year-on-year among both business and consumer
customers.
1
OPENREACH BRAND AWARENESS
80%
SoR volumes
70%
70
60%
36
60%
50%
50%
1
40%
40%
5
30%
30%
20%
10%
20%
0%
Submitted
Pending
Rejected
Accepted*
Delivered
10%
*Accepted but not yet delivered
Non-BT CPs
BT CPs
0%
2005/06 2006/07 2007/08 2008/09
Source: BT
The chart at the top of the next column shows that BT Wholesale
received a higher proportion of requests from non-BT CPs than from
BT CPs and rejected an almost similar proportion. However all but
five of the 26 SoRs delivered were for non-BT CPs.
36
EAB Annual Report 2009
Consumer
Source: BT
2005/06 2006/07 2007/08 2008/09
Business
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Behavioural change
The main driver for Openreach brand awareness for business and
consumer customers is Openreach vans, according to surveys carried
out among both sets of customers. The survey also found that press
coverage was a factor in driving recognition of the brand. Openreach
has told the EAB that it will aim to ensure that brand awareness
continues its positive trend.
Customer satisfaction
The dashboard measures customer satisfaction with both the
Undertakings-related performance of Openreach and BT Wholesale.
Customer satisfaction remains an important indicator of behavioural
change as it indicates customer confidence in BT’s delivery of the
Undertakings, although it can also be one of the most challenging to
interpret as explanations are not always available as to why figures
fluctuate year-on-year.
Satisfaction with engineers’ behaviour
Openreach regularly surveys its customers to assess how satisfied
they are with the behaviour of engineers on visits. Many of
Openreach’s CP customers sell Openreach services under their own
brand to end customers but rely on Openreach engineers to make
site visits. It is therefore important that Openreach engineers are able
to behave in an impartial way when visiting the end customers of
both BT CPs and non-BT CPs. The chart below shows that satisfaction
with engineering behaviour regarding equivalence has risen during
2008/09:
although the overall total could still be improved. However there
were also fewer complaints regarding engineers during the year so it
could also indicate that satisfaction levels have risen as a result of
other factors. For more information on complaints, see p41.
Satisfaction with Openreach EoI products
The chart below shows that satisfaction among non-BT CPs with the
EoI products provided by Openreach has risen only slightly over the
year although the overall levels remain high. The reliability of
Openreach products received the highest score and the delivery of
products in a working condition also scored relatively highly. The
most marked improvement from the first full year of the
Undertakings in 2006/07 was for the overall time taken to repair
faults. The EAB is satisfied that Openreach has continued to work
hard to improve the customer experience with regards to EoI
products throughout the year.
CUSTOMER SATISFACTION ON OPENREACH EOI PRODUCTS
100%
90%
80%
70%
60%
50%
40%
30%
20%
SATISFACTION WITH OPENREACH ENGINEERS’
EQUIVALENT BEHAVIOUR
10%
0%
2006/07 Q107/08 Q207/08 Q307/08 Q407/08 Q108/09 Q208/09 Q308/09 Q408/09
80%
Overall time taken to repair faults from when first reported
Delivering products in a working condition
Product reliability
70%
60%
50%
Source: BT
40%
Satisfaction with Openreach
Openreach regularly surveys its CP customers on how satisfied they
are with its delivery of the Undertakings. Until April 2008 customers
were asked to respond to the question: “Do you believe Openreach
delivers products equivalently to all customers?” In April 2008
Openreach changed the question to read: “Compared with how your
business was treated by BT previously, do you feel Openreach is now
treating your business 1) better 2) worse or 3) the same?” The chart
on the next page shows that while more than 40% of respondents
answered ‘better’, there is still significant scope for this view to be
more widely held.
30%
20%
10%
0%
2006/07
2007/08
2008/09
Source: BT
A survey conducted by Openreach showed that some customers were
giving negative answers to the question: “Do you believe Openreach
engineers behave appropriately from the point of view of
equivalence?” as they were dissatisfied with operational issues
following a visit by an engineer rather than concerned about noncompliance with the Undertakings. For 2008/09 Openreach changed
the emphasis of the question to ask customers: “From the point of
view of equivalence, to what extent do you believe Openreach
engineers behave appropriately?” This clearer wording could
therefore have led to more positive responses during 2008/09
EAB Annual Report 2009
37
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OPENREACH CUSTOMER PERCEPTIONS
OF THE UNDERTAKINGS’ DELIVERY
70%
60%
50%
Scale: 100%
Our view on behavioural change
The EAB is satisfied that BT continues to encourage behavioural
change in compliance with the Undertakings as well as making
improvements to its behavioural reporting. The introduction of the
new computer-based training for the Code of Practice and the
ongoing improvements made by Openreach’s ‘Living the Spirit’
programme are to be commended.
40%
30%
20%
10%
Ap
r0
M7
ay
Ju
n
Ju
l
Au
g
Se
p
Oc
t
No
v
De
Ja c
n0
Fe8
b
M
ar
Ap
r
M
ay
Ju
n
Ju
l
Au
g
Se
p
Oc
t
No
v
De
Ja c
n0
Fe9
b
M
ar
0%
Confidence that BT will deliver against its commitments in the Undertakings
Believe Openreach delivers products equivalently to all customers
Feel Openreach is treating your business differently (% yes)
Source: BT
Satisfaction with BT Wholesale
BT Wholesale also surveys its CP customers on a regular basis but has
introduced a new survey process and half way through the year
discontinued the question: “Do you believe BT Wholesale delivers
products equivalently to all customers?” Even so, the chart below
shows that the trend is largely flat on an ongoing basis.
BT WHOLESALE CUSTOMER PERCEPTIONS
OF THE UNDERTAKINGS’ DELIVERY
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Ap
r0
M7
ay
Ju
n
Ju
l
Au
g
Se
p
Oc
t
No
v
De
Ja c
n0
8
Fe
b
M
ar
Ap
r
M
ay
Ju
n
Ju
l
Au
g
Se
p
Oc
t
No
v
D
Ja ec
n0
9
Fe
b
M
ar
0%
Confidence that BT will deliver against its commitments in the Undertakings
Believe BT Wholesale delivers products equivalently to all customers
38
EAB Annual Report 2009
The EAB also recognises that many of BT’s lines of business have put
in place tailored training programmes to target high risk groups of
employees. Direct engagement with industry remains one of the
most reliable ways of measuring satisfaction with behavioural
compliance within BT. CPs have told the EAB that they are satisfied
with the way that Openreach treats them although these views are
not necessarily fully reflected in the formal measures of customer
satisfaction.
The EAB would like BT to continue to focus on behavioural change
associated with the Undertakings even though many of the major
product and organisational Undertakings’ milestones have passed.
The EAB will also continue to monitor that the information
boundaries between all BT lines of business are operating
compliantly.
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Understanding non-compliance
The Undertakings place obligations on both the EAB and BT to identify, investigate
and report on incidents of non-compliance. The EAB also identifies instances of
non-compliance through its ongoing monitoring programme which includes reviews
and ‘spot checks’ in a broad range of areas.
There are a number of ways in which the EAB investigates noncompliance. The EAB examines in detail the cases of non-compliance
reported to it by BT, most particularly notifications of breaches and
the proposed remedial actions. It also considers complaints received
by BT and those reported directly to the EAO.
The EAB also encourages BT to consider the ‘root causes’ of noncompliance so that they can be addressed and the risk reduced of
further incidents occurring. Each year the EAB analyses the main
trends emerging from its monitoring programme to draw conclusions
on BT’s overall compliance over the year as well as to identify future
Undertakings compliance risks. The EAB liaises closely with BT to
ensure that adequate risk mitigation plans are in place.
Breaches
The Undertakings place obligations on BT and the EAB to identify
and report on breaches. Following a notification from BT or the EAO,
the EAB determines its view on a breach, including significance
(trivial or non-trivial) and the appropriateness of the remedial action.
A description of the breaches reported during 2008/09 as well as a
root cause analysis of breach cases over the last three years is set out
below.
In 2008/09 BT reported twenty breach cases (three more than were
reported in 2007/08) and at year end a further three cases were
under investigation. Seven non-trivial breaches were identified, five
of which resulted from non-EoI activity and two concerned BT’s
failure to deliver a milestone by the required date. They were:
Non-trivial breach details
Remedy
BT CPs were provided with extra information compared to
non-BT CPs regarding assurance and fulfilment information
for WLR3 orders.
Within two months BT proposed to make similar reports available to
all CPs that requested them.
The case was notified by BT to the EAB in July 2008. BT considered
the case trivial on the basis that similar information was available to
non-BT CPs online via the fault-tracker tool but that the uniquely
high level of WLR3 orders placed by BT CPs required a different
approach. The EAB did not agree with BT’s recommendation on the
basis that EoI principles should have been applied by BT and all CPs
should have been offered the opportunity to receive similar reports.
BT did not achieve the milestone for the migration of 30% of BT’s
installed base to WLR3 (due in June 2008).
The EAB validated BT’s remedial action and closed the case in
November 2008.
BT committed to a revised target date of December 2008 as
requested by Ofcom for the migration of 30% of BT’s installed base
to WLR3.
In February 2009 the EAB confirmed BT’s delivery of this milestone
by the revised date and the case was closed.
EAB Annual Report 2009
39
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Non-trivial breach details
Remedy
BT CPs and non-BT CPs were given different EMP systems
interface testing options.
Openreach had intended to launch the EoI product no later than
November 2008 but feedback from CPs led to a different
approach and an EoI pilot was launched in January 2009. At the
time this report was published Openreach was monitoring the
success of the product before deciding on whether to launch it
commercially.
The EAB agreed with BT’s assessment that the breach was nontrivial as the same testing options should have been provided as
an EoI product to all CPs.
A review by the EAO found that the LLU Customer Service Plan
(CSP) for BT Wholesale differed from the standard LLU CSP and
contained a dedicated email address and team for escalation
cases.
Openreach put in place a revised CSP to ensure equivalent
escalation processes are operating for all LLU customers.
The EAB validated the remedy and the case was closed in
November 2008.
The EAB considered this to be a non-trivial breach as the non-EoI
process had been in place for eleven months and BT had failed to
make non-BT CPs aware of the dedicated email address.
An investigation found that Openreach had not correctly billed
other parts of BT for some of its products and services. The EAB
considered this to be a non-trivial breach.
At the time this report was published, BT was in the process of
making corrective payments to Openreach.
Openreach migrated some of its remaining billing activity for BT
CPs from legacy processes to its EoI billing platform and this was
due to be completed in Q1 2009/10.
BT Payphones engineers and other–non Openreach teams
involved in the provision of non-EoI telephony services carried
out work on Openreach assets without its agreement.
Openreach has established internal trading agreements with the
relevant parts of BT so that work on Openreach assets takes place
under its supervision and control.
BT did not achieve the WLR3 ISDN2 IBMC milestone which was
due by 31 March 2009
Under discussion between BT and Ofcom at the time this report
was published.
The thirteen other breach cases identified this year were classified as trivial. They are summarised by category in the table below:
Category
Number
Example
EoI – breaches associated with the
delivery of equivalence of inputs for
products and services
6
WLR Analogue – BT Retail fell back to the use of legacy systems
for two days when a simultaneous hardware and software upgrade
caused the EoI system to fail.
Lack of effective control over
Openreach assets
2
A BT Wholesale team carried out WES/BES diagnostic and testing
work for all CPs that was not under the supervision of Openreach or
subject to a service level agreement.
Systems access errors – breaches resulting
from errors in the application of user access
controls
2
Coding errors in an OSS resulted in the potential inappropriate
access by other users in BT to Openreach data (there was no
evidence that information had been inappropriately accessed).
Inappropriate information sharing
2
Two technical experts from BT Global Services involved in the
development of a new EoI ISDN/Highway conversion process were
informed of the proposed launch of the new process shortly before
the announcement of the date to industry.
Failure to appropriately brand a service
from Openreach
1
Failure to brand a repair service as an Openreach service on
the system shared with BT Wholesale.
40
EAB Annual Report 2009
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Understanding non-compliance
Root cause analysis of breach cases over the last three years
In the past three years, the number of breach cases has grown as the
complexity of milestone delivery has increased. The EAB has been
notified of 46 breaches of the Undertakings, 14 of which were
detected through the EAB’s own compliance monitoring activity.
Over a quarter of all the cases have been determined non-trivial.
The EAB completed a review of the root cause of each of these
breach cases and found that half of the overall number related to a
failure by BT to operate equivalent processes consistently, even when
such processes have been developed and fully implemented.
These cases were often linked to a lack of sufficient staff awareness
of the relevant EoI process and how it should be applied in practice –
an issue where the EAB has frequently requested BT improve its
approach by using targeted training initiatives and by testing the level
of staff understanding.
Although BT has made good progress in investigating incidences of
non-compliance, recurrent EoI breach cases show that there is scope
for further improvements. The EAB was disappointed that basic
mistakes are still being made by BT in failing to identify the EoI
implications of its decisions when providing new products and
services – for example the non-trivial breach regarding extra
information provided to BT CPs regarding the assurance and
fulfilment of WLR3 orders (see table on the opposite page).
Incidents of inappropriate information sharing accounted for the
second highest number of breach cases reported to the EAB although
only two cases were reported this year compared to five cases last
year. This is an encouraging trend although other compliance
monitoring activity has revealed this as an area of ongoing risk and
therefore it is one that the EAB intends to monitor closely.
The EAB’s analysis also highlighted a large number of breach cases
that have resulted from the persistent use of legacy processes: for
example non-Openreach engineers working on assets belonging to
Openreach. The EAB has therefore suggested to BT that each line of
business review its high risk processes to ensure that they are
compliant and BT has since made recommendations for dealing with
outstanding legacy processes.
Managing and remedying breaches
During 2008/09 the EAB has worked with BT to improve the
effectiveness of BT’s breach investigation process and the remedy of
cases. The EAB has recognised that BT has placed greater emphasis
on understanding the root cause of breach cases and disseminating
this information more widely so that the lessons are learnt. The EAB
has particularly noted the progress made by Openreach in this area.
However, the EAB has yet to see progress in the timeliness of BT’s
reporting and remediation of breach cases. It took BT fifteen months
to complete its investigation and notify the EAB of a breach
regarding the remote diagnostic and testing of (non-EoI) voice
products by BT Pay Phone and other non-Openreach engineers. BT
has also been slow to remedy some trivial breach cases, for example
one took six months to remedy. The EAB has raised this concern with
BT and the company has taken a number of steps with a view to
reducing the time taken to analyse and report cases and to complete
remedial actions.
Complaints
Both BT and the EAB handle complaints from CPs regarding incidents
of non-compliance. BT also receives complaints directly from
employees.
Complaints to BT
As in previous years the EAB has continued to receive quarterly
reports of the complaints that BT has received from CPs. The number
of complaints in 2008/09 has fallen to 19 compared to 40 in
2007/08 and 28 in 2006/07. In particular, there has been a marked
decrease in the number of complaints relating to engineers’
interactions with end-users – of which there has only been three
compared to 25 last year – although even this was a very small
proportion of the overall number of customer visits made by
engineers. The EAB believes that this demonstrates that good
progress has been made by Openreach in this aspect of behavioural
training.
Just under half of this year’s complaints to BT related to equivalence.
A typical example involved a service provider alleging that an advisor
had incorrectly processed ten transfer orders for WLR3 ISDN30
although an equivalent process was in place. This was found to be a
case of human error and the advisor was trained in the correct
procedure and the orders were later processed correctly. Such cases
reinforce the EAB’s view that BT still needs to focus on raising the
level of staff awareness and understanding of the Undertakings and
EoI processes. However given the large number of transactions that
take place between BT and CPs every day, the number of complaints
remains low.
Complaint to the EAB
In May 2008 the EAB received a joint complaint from six CPs (who
requested to remain anonymous) relating to the launch of two
Ethernet products, EBD and BTL. These products were launched on
22 May 2008 as a result of a review by Openreach of its Ethernet
portfolio.
The complainants raised a number of issues including the absence of
service level agreements/guarantees for some products and also
alleged “abuse of Openreach’s dominance”. The EAB upheld an issue
the CPs raised in relation to service level agreements for resilience,
finding it to be a trivial breach of the Undertakings, however it did
not uphold the other points raised. Nonetheless, the EAB
recommended that Openreach should report how it intends to
improve its product launch processes. In addition the EAB carried out
its own detailed review of the Openreach product launch and in-life
development process and recommended the introduction of
compliance checks and balances (see p43).
Issues Management
The EAO looks into issues raised informally by key stakeholders
including BT, non-BT CPs, Ofcom and OTA2. This process allows the
EAO to assess rapidly whether an issue requires more detailed, formal
investigation. Non-BT CPs have told the EAO that they find the
process a useful way of resolving their concerns without needing to
submit a formal complaint and this may explain partly why the EAO
has only received four complaints in the last three years.
EAB Annual Report 2009
41
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The EAO investigated 70 issues in 2006/07 – half of which were
raised directly by non-BT CPs. The total number of issues raised fell to
29 in 2007/08 and 14 in 2008/09 and these originated mainly from
non-BT CPs in both years. The reduction may be related to the fact
that many of the major Undertakings’ milestones have now been
delivered by BT, and key stakeholders are less focused on detailed
implementation issues. Also, at the EAO’s industry conference in
September 2008 participants indicated a high level of confidence in
the EAB’s monitoring and reporting activities, possibly
demonstrating that they feel that the EAB already has good oversight
of compliance issues.
Reviews of ongoing compliance
In 2008/09, most of the issues related to EoI concerns in respect of
voice products as well as the governance of some of BT’s processes.
Although they were fewer in number, the issues reported this year
had greater relevance and validity. One of these issues later became a
formal complaint to the EAB and five of the issues raised have
resulted in the EAB’s recommending actions to BT. For example, in
response to a query raised by OTA2, the EAB suggested that BT
should review regularly the list of staff eligible to view consolidated
product volume forecast data. In another example, the BT Chairman’s
Office agreed to review its procedures and provide clearer guidance
to its advisors on dealing with the complaints of end-users of
services from non-BT CPs.
During 2008/09 the EAB conducted ten reviews of ongoing
compliance as a result of issues raised by breaches, complaints,
stakeholder input and the outcome of previous reviews. These are
shown in the table below and on the following pages:
The EAB agrees a programme of ongoing compliance reviews based
on areas of known or potential risk. In devising the programme the
EAB considers common themes arising from breach cases or issues
identified during the validation of key milestones and other
Undertakings’ obligations. The EAB also takes account of the findings
of relevant internal and external audit reports that have focused on
BT’s delivery of the Undertakings, as well issues raised by key
stakeholders.
Reviews resulting from breaches:
Review
EAB’s findings/recommendations
BT’s response to date
Control of Openreach assets –
the review was initiated following
a number of breach cases of
non-Openreach engineers working
on Openreach assets including the
local access and backhaul networks.
The review sought to identify the
reasons for these recurrent cases
and the actions that might be taken
by BT to minimise the risk of similar
breaches occurring in the future.
The review found that at the time the
Undertakings were implemented, a
number of separate engineering teams
existed outside Openreach, creating
a complex set of interfaces between
Openreach assets and those owned
by other parts of BT.
BT Operate is reviewing its training of
engineers and how it can monitor their
understanding of the appropriate rules.
42
EAB Annual Report 2009
This complexity has been reduced
through the transfer of most
non-Openreach engineering teams to
BT Operate. The boundary and ownership
of assets between BT Operate and
Openreach has been defined in detail and
significant progress has been made in
designing compliant working practices.
However, the EAB recommended that BT
should seek to improve the communication
of the information to the engineering
workforce and consider the role of the
compliance training which is not currently
mandatory.
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Understanding non-compliance
Review
EAB’s findings/recommendations
BT’s response to date
Openreach charging and billing processes –
the combination of a significant breach
case and a previous compliance review
led to the EAB’s highlighting that these
processes were at risk of non-compliance.
From an equivalence perspective, the
review focused on charging and billing
arrangements for the SMPF, WLR3
Analogue, MPF and WLR3 ISDN30
products.
The review found that Openreach had used
different methods to calculate charges for
BT CPs and non-BT CPs for some EoI
products. Further investigation of the
findings by BT established that a
non-trivial breach had occurred
resulting from the use of legacy
approaches (see p40).
Openreach has made significant progress
towards the migration of all its billing
activity to its new EoI billing platform – a
process that it expected to complete by
Q1 2009.
Escalation process – the escalation
process is the route by which BT CPs
and non-BT CPs raise operational
issues requiring resolution. Previous
breach cases and ongoing compliance
activity had highlighted that this process
was at risk of being non-equivalent. The
review looked at escalations processes in
Openreach and BT Wholesale.
The review found that the high level
escalation processes in BT Wholesale and
Openreach were operating equivalently.
However, at the operational level the review
found evidence that non-equivalent
escalation processes were in place for
specific product areas. BT’s further
investigation of these issues concluded
that there had been a non-trivial breach in
respect of LLU escalations. The EAO
therefore intends to keep these processes
under review.
Openreach has put in place a revised
Customer Service Plan to ensure equivalent
escalation processes are operating for all LLU
customers. BT’s migration towards automated
processes may minimise the potential for
discretionary, non-equivalent processes.
Review
EAB’s findings/recommendations
BT’s response to date
Openreach product launch and in-life
development process – as a result of the
multi-party complaint received by
the EAO and the root cause analysis of
various breach cases, the EAB conducted
an end-to-end review of the Openreach
product life-cycle to determine whether
appropriate checks and balances were in
place to ensure equivalence.
The review found that since its creation,
Openreach had placed too much reliance
on an implicit understanding of legal and
regulatory requirements and equivalence
issues by those involved in the operation
of the product development process.
Over the year, Openreach had made some
improvements to its processes such as the
introduction of new guidelines for the
operation of service trials. However, the
EAB recommended that Openreach should
regularly report its progress in introducing
a comprehensive set of equivalence checks
and balances thoughout the whole product
development and launch process.
Openreach has conducted a full review of its
product development process and will report
to the EAB on detailed proposals to introduce
additional compliance checks. The EAB will
conduct a follow-up review in the coming
year.
Review
EAB’s findings/recommendations
BT’s response to date
BT Ireland (North)
WLR performance – following concerns
expressed by participants in the Ofcom
Northern Ireland Telecom Stakeholders
Forum, the EAB reviewed the product
performance of WLR based on the relevant
KPI data.
The review confirmed the level of
performance in Northern Ireland was
comparable to that in the rest of the UK.
N/A
Reviews resulting from complaints:
Reviews resulting from stakeholder issues:
EAB Annual Report 2009
43
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Reviews resulting from stakeholder issues:
Review
EAB’s findings/recommendations
BT’s response to date
OSS/MIS systems separation
classification process – the review looked
at the robustness of BT’s approach to
classifying the systems supporting
WLR Analogue, WLR ISDN2, WLR ISDN30
and LLU that are subject to systems
separation requirements. The information
sharing risks resulting from the potential
mis-classification of systems were
also considered.
The review found that a robust process was
followed by BT and that systems had been
appropriately classified. However, the EAB
recommended that BT should consider the
potential information sharing risks for two
of the systems that had been correctly
excluded for systems separation, but
nonetheless contained data that needed
to be controlled.
BT has reviewed user access to the relevant
systems to ensure that users have a
legitimate, operational need for access. It
has also removed any functionality that may
result in non-compliant behaviour.
BT’s 21CN Governance processes –
the EAB conducted a review of BT’s 21CN
governance focusing on the governance
structure, compliance structure, and
industry engagement.
The review found that the 21CN Programme
had a robust governance structure free of
undue influence by the downstream lines
of business, and it was able to address
compliance with the Undertakings. BT had
appointed a ‘champion’ to oversee
compliance monitoring and to investigate
any risks of potential network foreclosure.
The EAB concluded that the industry
consultation process was mature. However
it recommended that BT should adopt a
more transparent approach to describing
how industry feedback had been taken
into account in respect of design decisions.
BT is considering its approach to making
design decisions more transparent to allay
industry concerns over pre-determined
outcomes.
Compliance with new information sharing
rules within BT Design – in its review of
information sharing in BT Design and BT
Operate in 2007/08, the EAB noted the
plans of each to comply with the revised
information sharing rules that came into
force in April 2008. This year the EAB
looked in detail at how those plans had
been put into practice.
The EAB’s review of BT Design found that
there was scope for BT to improve the level
of staff awareness and understanding of
information sharing rules and that more
robust controls should be put in place in
respect of access to information. Further,
it was recommended that BT Design should
review its criteria for information sharing
rules for members of teams with restricted
information access.
BT has advised the EAB that a number of
initiatives are under way to address these
areas of potential compliance risk which will
be assessed by the EAB in a follow-up
review in 2009/10.
Compliance with new information
sharing rules within BT Operate – as a
result of its previous review the EAB was
particularly concerned about the controls
surrounding teams in BT Operate with
permitted access to Openreach data. It
therefore requested BT’s Regulatory
Compliance team conduct a detailed
review of the operation of these controls.
The review found that generally the controls
were working well but as they were manually
based, there were some concerns around
the consistency and accuracy of their
operation. The EAB recommended that the
controls should be tightened and that there
should be full-time management of the
permitted access controls until systems are
separated or other automated processes make
them redundant.
BT Operate is reviewing its controls with
regards to permitted access data for teams
with the relevant permission.
44
EAB Annual Report 2009
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Understanding non-compliance
Review
EAB’s findings/recommendations
BT’s response to date
Business process outsourcing to India –
this preliminary review was initiated by
the EAB to understand the compliance
implications of BT using third party
contractors based in India.
The review confirmed that there are a
substantial number of contractors
carrying out customer service and IT work
on behalf of BT. The EAB therefore
recommended that BT should report its
proposed plan of audits going forward.
BT carried out a review of key processes in
India and found that they were functioning
satisfactorily although it made a
recommendation regarding the potential
for unauthorised access to Openreach
systems. BT Operate has confirmed
that it is planning an audit of its
outsourcing partners in India and the UK,
which is expected to take place in 2009/10.
At the EAO’s request, BT Operate will
include a check of appropriate compliance
controls and contractors’ awareness of the
relevant Undertakings’ obligations.
The EAB is satisfied that BT has sought to remedy the incidences of non-compliance highlighted by the EAO’s reviews during 2008/09. It will
continue to track progress in these areas and has also used its ongoing compliance work to consider the ongoing risks to BT’s compliance with
the Undertakings.
Key compliance risks
Based on a review of the data and findings resulting from all of its compliance monitoring activity the EAB has identified the key risks that will
inform its programme of work in 2009/10.
The top five compliance risks and the EAB and BT’s proposed recommendations/actions are as follows:
Key areas of non-compliance risk
EAB’s recommendations and actions
BT’s proposed actions
1. Late delivery of future milestones
(for example, the WLR3 ISDN2 and WLR3
ISDN30 IBMC milestones).
The EAB will continue its rigorous monthly
monitoring of BT’s progress towards the
delivery of the remaining key milestones.
Taking account of the EAB’s concerns, BT is
reviewing delivery of future Undertakings’
requirements with Ofcom.
2. Inappropriate information sharing.
The EAB plans to conduct reviews of
information sharing in BT in Q3 2009/10 and
will follow-up the actions recommended to
BT Operate and BT Design as a result of the
reviews that took place in Q3 2008/09.
Targeted training activities are under way
in BT Design, and BT Operate is in the process
of tightening up the controls over teams with
permitted access to Openreach data.
Both BT Wholesale and Openreach have
designed and are implementing significant,
targeted education programmes.
3. Non-equivalence of Openreach billing
and charging processes.
The EAB has requested Openreach to provide
a full report of its review of billing and
charging processes and the proposed
remedies to address non-compliant issues.
The EAB will validate any remedial actions.
In Q1 2009/10, Openreach plans to provide
the EAB with a full update on its review and
proposed next steps. It has said that it will
confirm when it has moved all products to
the EoI billing platform.
EAB Annual Report 2009
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Key areas of non-compliance risk
EAB’s recommendations and actions
BT’s proposed actions
4. Ineffective compliance governance
processes (for example, ineffective
oversight of the control of Openreach
assets, and issues regarding Openreach
product management).
The EAB has recommended to BT that it
should review all of its high risk processes
to ensure that any non-compliant legacy
approaches are identified and ceased.
Openreach has begun implementing
improvements to its product launch process
which are more advanced for NGA than for
the rest of the portfolio. It has also introduced
some additional compliance controls and will
report on further planned improvements to
the EAB in early 2009/10.
The EAB has also requested that Openreach
should regularly report on the proposed
improvements to its product launch process.
Openreach will continue to identify potential
areas of non-compliance throughout
2009/10.
5. Non-equivalent escalation processes.
The EAB will conduct a follow-up review of
Openreach’s escalation processes in the
coming year.
The EAB’s risk analysis will be updated on a quarterly basis so its
2009/10 programme of work can adapt to new and emerging risks.
This analysis has informed the EAB’s monitoring priorities for
2009/10 as set out in the next section: ‘Outlook for 2009/10’.
Our overall view on non-compliance
The EAB considered that the reduction in the number of CP
complaints to BT and concerns raised with the EAO indicated an
increased level of industry confidence in BT’s implementation of the
Undertakings.
46
EAB Annual Report 2009
Openreach and BT are addressing each of
the issues highlighted by the EAB’s review
and will report their response in early
2009/10.
The EAB also commended Openreach for its systematic and proactive approach to identifying and addressing incidents of
non-compliance. However, the EAB remains concerned that the
basic rules and requirements of the Undertakings relating to EoI and
information sharing are not always applied by individuals or
considered in the implementation of core processes.
The EAB will continue to pay close attention to BT’s assessment of
core processes during 2009/10 and it will also expect to see
improvements to the Openreach product launch process from an
equivalence perspective. During the coming year the EAB also
anticipates a marked improvement in the speed of BT’s assessment of
breach cases and the timely remedy of issues. For more information
on the EAB’s areas of focus for 2009/10 see opposite.
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Outlook for 2009/10
The EAB’s focus will continue to evolve with ongoing compliance, NGA and 21CN
all playing a central role in its future monitoring programme.
Forward-looking information by its nature is inherently
speculative and involves uncertainty because it relates to events
and depends on circumstances that will occur in the future.
Bearing these factors in mind, the focus areas for 2009/10
identified below are based on key trends, risks and priorities
highlighted during 2008/09.
Review of future Undertakings’ milestones
The extent to which current generation EoI products and system
separation milestones form part of the EAB’s role in the coming
year will depend to a large extent on the outcome of Ofcom’s
review of the remaining milestones. However, until this is agreed
the EAB is planning to validate the milestones due in 2009/10
including the migration of 70% of BT Retail’s installed customer
base by 30 June 2009 as well as progress towards the migration
of 100% of BT’s installed user base by 30 June 2010 although it
has flagged risks associated with the delivery of these products
(see p45).
Broadening approach to ongoing compliance
For the past few years the EAB has monitored the delivery of
major product and systems milestones as well as BT’s ongoing
compliance with a wide range of Undertakings-related
obligations. In 2009/10 the EAB will continue to further develop
its reviews of ongoing compliance as these are instrumental in
identifying areas where BT is performing well and also in showing
patterns of non-compliance.
Risk areas identified during previous reviews, which will shape
the EAB’s work during the coming year, include ongoing
concerns about non-compliant information sharing across
organisational boundaries, concerns expressed about
Openreach’s EoI product launch process and its newly introduced
billing platform and issues around BT’s escalation processes.
It is also important that the EAB evolves its approach to ongoing
monitoring as circumstances change. For example it will closely
examine any changes to IPstream and its successor products in
those areas where there are fewer than four wholesale providers
and BT is determined by Ofcom to have SMP. The EAB will also
continue its ongoing process of re-checking all Undertakings’
obligations on a periodic basis.
Checking equivalence is part of NGN and NGA
A key part of the EAB’s work will be an increased focus on how
EoI obligations apply to new technology programmes. In the
coming year the EAB’s validation of EoI products associated with
BT’s 21CN may depend on the outcome of changes to BT’s voice
strategy (for more information see p29). Nonetheless the EAB
will be reviewing BT’s governance around its 21CN programme
and paying particular attention to the development of any new
voice products.
The roll out of the NGA programme in 2009/10 also has major
implications for the EAB’s oversight of EoI developments. An
important part of the EAB’s work will be to validate that Generic
Ethernet Access over FTTC is offered on an EoI basis as this will be
the core product of the programme roll-out. The EAB also plans to
validate the business-oriented service, Direct Ethernet Access. It
also awaits Ofcom’s final conclusion on a variation to the
Undertakings regarding NGA. The consultation was still under way
when this report was agreed.
Keeping track of behavioural change
Undertakings-related behavioural change within BT will continue to
attract close scrutiny. The EAB will examine whether BT has been
effective in introducing tailored training and it will assess where
possible how this has improved the understanding of the
Undertakings in people’s daily roles. The EAB is also increasingly
turning its attention to the root causes of problems – such as
understanding why some types of breaches recur – to assess
whether BT is addressing not only the immediate problem but also
any underlying issue.
Maintaining a focus on equivalence
Product KPIs will remain on the EAB’s agenda as a way of
assessing whether the service delivered to all CPs is similar. These
KPIs will be extended to encompass key next generation products
in the coming year.
Our view
The current economic and regulatory circumstances make
predicting future developments very challenging. However the
EAB will continue to monitor that BT compliantly meets its EoI
obligations across a range of current and next generation
platforms as determined by the Undertakings. Effective industry
consultation remains at the core of ensuring that EoI is delivered
and the EAB will continue to engage with industry stakeholders
to understand how ongoing changes affect their strategic
priorities – and it will also monitor that BT’s consultation
processes operate in an equivalent way.
BT’s implementation of the Undertakings over the past three and
a half years has brought benefits to industry stakeholders and the
EAB will continue to monitor through its reviews of ongoing
compliance that equivalence is sustained during the move from
current to next generation products and services.
EAB Annual Report 2009
47
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How we formed our opinions
The EAB is required to submit an annual report to Ofcom providing its views on a
range of matters relating to BT’s compliance with the Undertakings. The EAB must
also publish a summary report (the “EAB Annual Report”) on its activities which is
subject to an independent, external assurance review.
This is the fourth Annual Report and like the previous reports
includes a number of key opinions and product KPIs which are
independently assured by PricewaterhouseCoopers (“PwC”). These
are marked by the following symbol
throughout the report. PwC
also assesses whether this report is consistent with the EAB’s annual
report to Ofcom. PwC’s independent report and opinions are set out
on p51 of this report.
This section explains the reporting policies adopted by the EAB in
forming its opinions.
Opinions on the EAB’s governance and the adequacy of its resources
On page 7, the EAB reports that in respect of its governance
arrangements it is “satisfied that these are functioning well and that
it is effective in monitoring progress and advising BT on future
steps”. In reaching this opinion the EAB considered the following
matters:
The confidence of the EAB in the quality of information received
from BT and the EAB’s access to senior BT executives, as expressed
in the results of a review of members opinions conducted by the
EAO in January 2009.
The improvements to the EAB monitoring processes over the last
year to include the EAB’s oversight of the general obligations
regarding NGA in the Undertakings.
The quality and timeliness of the reports submitted by the EAO to
the EAB.
The performance of the EAO’s breaches and complaints processes
and the EAO’s work with BT to improve the analysis, reporting and
remediation of breach cases.
The findings of the BT Internal Audit review of the EAO in Q4
2008/09 and Ofcom’s Annual Assessment of BT’s delivery of the
Undertakings.
The views of CPs and industry bodies on BT’s delivery of the
Undertakings expressed during direct engagement with the EAB.
The relevant skills and experience of EAB members and their
understanding of the EAB’s role and responsibilities in BT.
The EAO’s access to information held by BT; and the adequacy of
the process for compiling annual reports and the ability of the
EAB to have unfettered influence on the detailed content and
conclusions of the reports.
The views of the Director EAO on the level of resources at their
disposal.
48
EAB Annual Report 2009
Opinion on BT’s governance associated with the Undertakings
On page 15, the EAB reports that BT’s governance framework has
“worked well in terms of monitoring and reporting but there are
elements of BT’s governance of specific processes, for example,
Openreach billing and product management processes that need to
be improved ”.
In reaching its conclusions of BT’s governance arrangements the EAB
has had regard to the following processes:
The mechanisms in place for ensuring complete and accurate
monitoring of BT Operate and BT Design’s implementation of
milestones and ongoing compliance.
The measures in place to detect and address potential breaches. In
particular BT’s commitment to improving the effectiveness of its
management of breach cases to include root cause analysis to
understand and address specific areas of weakness.
BT’s processes to handle complaints relating to the Undertakings.
BT’s programme of reporting to the BT Group plc Board and the
relevant committees.
The EAB also took account of the following information resulting from
the implementation of these processes and the EAO’s own in-depth
reviews and audits of BT’s ongoing delivery of the Undertakings:
The findings of the EAO’s monthly monitoring reports on BT’s
compliance with the Undertakings, including steps being taken to
deliver future commitments.
Quarterly reports from BT to the EAB of its progress in
implementing and measuring behavioural change.
The Director EAO’s monthly report to the EAB which, inter alia,
tracks and comments on governance developments.
Quarterly operational reports from the Openreach CEO, on the
measures being taken to ensure and maintain a compliant
organisation.
The views expressed by individual CPs in presentations to the EAB.
The EAO’s quarterly reports on complaints relating to the
Undertakings which include an assessment of BT’s complaints
handling arrangements.
Experience of reporting to the EAB on breach investigations and
follow-up by BT and the EAO.
The results of the EAO’s issues management process where all the
issues raised by CPs or internally are assessed to determine if they
require further investigation.
The findings of the EAO’s ongoing compliance audits as detailed in
the EAO’s Audit and Validation Plan which includes exemptions
and variations to the Undertakings that BT has agreed with Ofcom.
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How we formed our opinions
Opinion on BT’s delivery of the
Undertakings during 2008/09
Over the year, based on the EAO’s monthly status report, the EAB has
also monitored BT’s compliance with variations and exemptions to
the Undertakings by the agreed date.
In the sections ‘Current Generation Products’, ‘Systems and Assets’,
‘Next Generation Networks and Access’ and ‘Understanding noncompliance’, the EAB reports its opinions of BT’s delivery of key
Undertakings during the year and its views on ongoing compliance.
Opinions on the status of specific Undertakings milestones
(summarised in the tables below) are determined through the EAB’s
Undertakings validation process; NGN monitoring process; and its
processes for monitoring ongoing compliance and exemptions and
variations.
Conclusions of the EAB’s validation of BT’s delivery of product and
systems obligations
BT’s delivery of each Undertaking is allocated a status on the
following basis:
PRODUCTS
WLR Analogue
IBMC 30%
target
DUE DATE
EAB OPINION
REFERENCE
30 June
2008
Not achieved by the
required date – a
non-trivial breach
p19
Delivered three
months ahead of
schedule
p20
Blue
Undertakings completed, auditable evidence provided to
the EAO (including that from Internal Audit or Regulatory
Compliance) and validation successfully completed.
31 October
IPstream
2008
Connect
available for
order: start of BT
and CP end-user
migration
Green
Undertaking delivery on track, or Undertaking completion
asserted by BT and EAO validation is underway or is
awaiting auditable evidence of achievement.
WLR ISDN2
IBMC
31 March
2009
Not achieved by the
required date (nontrivial breach)
p19
IPstream
Connect
IBMC and
migration of CP
end user base
31 March
2009
Delivered on time
p20
Eol provision of
Openreach
products and
services
31 December EAO validation
2008
ongoing
p11 and p21
DUE DATE
EAB OPINION
REFERENCE
BT to publish
NGN plan of
record
15 October
2008
Delivered on time
p30
Launch of
Multi-Service
Interconnect
Link
Not
specified
Delivered on an Eol
basis
p29
Ethernet
Backhaul Direct
(EBD) and Bulk
Transport Link
Not
specified
Delivered on an Eol
basis
p29
Wholesale
Broadband
Connect
Not
specified
Delivered on an Eol
basis
p29
Amber
Undertaking is at risk i.e there are key issues that could
impact the delivery of the Undertakings to the agreed date
but these are being managed within the programme.
Red
Undertaking date has been missed or is in jeopardy
i.e there are key unresolved issues that will impact the
delivery of the Undertaking agreed date.
Only the EAO Director has authority to move significant Undertakings
from Green to Blue status although this authority is delegated in
respect of more minor obligations. The decision on the status of an
Undertaking is based on a validation review to determine whether BT
has completed the requirements of the Undertakings by the due
date. The EAO leads this review having previously agreed success
criteria with BT, and where appropriate draws upon the relevant
findings of BT Group’s Internal Audit or Regulatory Compliance teams
to undertake review activity on its behalf.
The EAO’s processes for monitoring ongoing compliance include
detailed compliance reviews that focus on broad processes, for
example, information sharing and audits of ongoing compliance with
specific sections of the Undertakings on a rolling basis as defined in
the EAO’s Audit and Validation Plan. The EAB agrees a programme of
ongoing compliance reviews based on areas of known or potential
risk. In devising the programme the EAB considers common themes
arising from breach cases or issues identified during the validation of
key milestones and other Undertakings’ obligations. The EAB also
takes account of the findings of relevant internal and external audit
reports that have assessed BT’s delivery of the Undertakings, as well
as issues raised by key stakeholders. The work this year has focused
on fixed line number portability, re-allocation of Openreach assets,
PPC transparency and the EoI migration process.
NGN
EAB Annual Report 2009
49
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SYSTEMS
SEPARATION
23:21
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EAB OPINION
50% of relevant 30 November Delivered on time
Customer side
2008
records migrated
to physically
separate OSS
Bleed: 5 mm
REFERENCE
p25
In addition, the EAB concluded on BT’s compliance with systems
separation requirements in respect of OSS relating to WLR3 ISDN30
and ongoing compliance with all OSS logical separation requirements
– see p25. The EAB’s opinions on these matters are informed in part
by independent assurance provided by PwC. See p25.
EAB’s conclusions on ongoing compliance
During 2008/09 the EAO conducted a number of reviews of BT’s
ongoing compliance with the Undertakings. These resulted in some
non-compliant incidents being identified as summarised below and
more details on the methodology and conclusions from these reviews
can be found on the pages listed:
REVIEW
Control over Openreach Assets
– p42
RECOMMENDATIONS
Recommendations made in
respect of communication to
the engineering workforce and
the role of compliance training.
Potential breach identified for
investigation by BT.
Openreach charging and
billing processes – p43
Non-trivial breach identified.
Escalation process – p43
Non-trivial breach identified.
Openreach product launch
and in-life development
process – p43
Recommendations made in
respect of reporting progress
on the introduction of
comprehensive equivalence
checks and balances
throughout the product
development and launch
process. No breaches identified.
BT Ireland (North) WLR
performance – p43
No significant issues noted.
OSS/MIS systems separation
classification process – p44
Recommendations made in
respect of potential information
sharing risks on two systems.
No breaches identified.
BT’s 21CN governance
processes – p44
Recommendations made in
respect of processes related to
industry feedback. No
breaches identified.
50
EAB Annual Report 2009
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REVIEW
RECOMMENDATIONS
Compliance with new
information sharing rules
within BT Design – p44
Recommendations made in
respect of process
improvements and staff
awareness and understanding
of information sharing rules.
No breaches identified.
Compliance with new
information sharing rules
within BT Operate – p44
Recommendations made in
respect of process
improvements. No breaches
identified.
Business process outsourcing
to India – p45
Recommendations made in
respect of BT’s plans for audits
of compliance by contractors.
No breaches identified.
EAB’s conclusions on exemptions and variations
There were eight obligations due in the year up to March 2009. The
EAB validated the delivery of these and it expressed concern about the
quality and timeliness of BT’s delivery of the ISDN/Highway conversion
process. It also noted that the Featurenet and Featureline RFS
milestones took longer to conclude because of their complexity.
Opinions on BT’s progress towards Undertakings due in 2009/10
The EAO’s monthly status report also informs the EAB’s plans for
monitoring, and its perspectives on BT’s future compliance, set out in
the ‘Understanding non-compliance’ and ‘Outlook’ sections of this
report. This includes on p45 the EAB’s opinion that, based on an
analysis of all of its compliance monitoring and reporting data, the top
five compliance risks are:
1. Late delivery of future milestones
2. Inappropriate information sharing
3. Non-equivalence of Openreach billing and charging processes
4. Ineffective compliance governance processes
5. Non-equivalent escalation processes
Product KPI monitoring
The EAO monitors BT’s KPIs for products covered by the
Undertakings on a monthly basis and reports them to the EAB. In
conducting this review the EAO considers the completeness and
accuracy of the KPI data supplied to it by BT and the effectiveness of
mechanisms for ensuring complete and accurate reporting of KPIs
and BT’s future plans for KPI development. As a further layer of
assurance over the accuracy of the product KPIs, BT’s Internal Audit
or Regulatory Compliance teams also review the integrity of the
systems from which the data is drawn. The EAO’s monthly report
highlights any significant changes to individual indicators which
suggest potential non-equivalence. The EAO investigates these
situations further with BT and reports its findings to the EAB.
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Independent Assurance Report
to the Equality of Access Board
and Ofcom
Respective responsibilities of the
Equality of Access Board and
PricewaterhouseCoopers LLP
We have been engaged to express an independent opinion on
selected aspects of the Equality of Access Board (“EAB”) Annual
Report for the year ended 31 March 2009 (the “Report”). The
preparation of the Report in accordance with the requirements of the
Undertakings given to Ofcom by BT Group plc (“BT” or the “Group”)
pursuant to the Enterprise Act 2002 effective 22 September 2005
(the “Undertakings”) is the sole responsibility of the EAB.
There are no generally accepted standards for reporting on
compliance with the Undertakings or in respect of related
performance measures. The reporting policies adopted by the EAB in
forming their opinions expressed within the Report are described in
the section titled ‘How we formed our opinions’ on pages 48 to 50
(the “Reporting Policy”).
Scope and approach
Our engagement was designed to provide assurance on:
whether, in our opinion, the EAB’s opinions in respect of:
– its governance arrangements;
– BT’s governance framework associated with the Undertakings;
– BT’s delivery of the Undertakings during the year ended
31 March 2009; and
– the future risks associated with the Undertakings after
31 March 2009;
are fairly stated in accordance with the Reporting Policy. These
opinions are shown on pages 7, 15 and 45, within the sections of
the Report entitled: The EAB, BT’s Delivery Framework and
Understanding non-compliance and reproduced in bold italic text
within the Reporting Policy and in respect of BT’s delivery of the
Undertakings during the year ended 31 March 2009 shown in the
tables on pages 49 and 50 of the Reporting Policy with further
description given on pages 17 to 32 of the Current generation
Products, Systems and assets and Next generation networks and
access sections of the Report (the “EAB’s Opinions”).
In this regard, we planned our procedures to have a reasonable
expectation of detecting material misstatements or omissions in
the EAB’s Opinions. We obtained an understanding of the relevant
controls and procedures applied by the EAB and the Equality of
Access Office (“EAO”) to generate, aggregate and evaluate
information in respect of the Group’s governance, delivery and
ongoing compliance with the Undertakings, including the EAO
monitoring and reporting, the audit and validation, the quick
checks, the exemptions and variations and the breaches and
complaints processes. We performed tests of these controls and
procedures and reviewed the work undertaken by BT’s Internal
Audit and Regulatory Compliance teams on behalf of the EAB
including, to the extent considered necessary, review of detailed
workpapers and re-performance of testing;
whether, in our opinion, the Report is consistent with the EAB’s
annual reporting to Ofcom which consists of the Report and
certain additional annexes (the “Ofcom Report”). In this regard,
we planned our procedures to have a reasonable expectation of
identifying any material inconsistency in the Report compared
with the content of the Ofcom Report. We performed a full
comparison of the text of the Report to the more detailed Ofcom
Report. Other than the consistency of the Report and the Ofcom
Report we have not been engaged to provide assurance over the
Ofcom Report. Accordingly we do not express any separate
opinion on the Ofcom Report;
whether, in our opinion, the Product Key Performance Indicators
for WLR3 Analogue Provision Performance – Basic Product, SMPF
Provision Performance – Basic Product, SMPF LLU Migration
Performance, Wholesale Extension Services Provision
Performance, Wholesale Extension Services Repair Performance
and IPStream Connect Provision Performance shown on pages 21,
22 and 23 are properly prepared in accordance with the
Reporting Policy. In this regard, we planned our procedures to
provide us with reasonable assurance they are properly prepared
in accordance with the Reporting Policy. We completed, in
conjunction with BT’s Internal Audit team, tests over data
generation within the underlying management information
systems of the group, data consolidation and reporting.
In addition, we reviewed the minutes of EAB meetings, discussed
with employees of the Equality of Access Office the processes to
collate the Report and reviewed the remainder of the Report for
consistency with our knowledge of the Group in order to report
whether anything came to our attention to indicate that the
remainder of the Report is inconsistent with the findings of our work.
EAB Annual Report 2009
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Our engagement includes the expression of an opinion on the
fairness of the EAB’s opinions in respect of BT’s governance
associated with the Undertakings, BT’s delivery of the Undertakings
during the year ended 31 March 2009 and future risks associated
with the Undertakings due after 31 March 2009. Our assurance
procedures, which are described above, focus on understanding and
evaluating the relevant controls and procedures applied by the EAB
and the EAO to generate, aggregate and evaluate information in
respect of the Group’s governance and compliance with the
Undertakings. We have not been engaged to provide any separate
independent assurance over the internal controls and other actions
implemented by the Group to ensure compliance with the
Undertakings. Accordingly we do not express an opinion in this
regard.
We planned and performed our evidence-gathering procedures to
obtain a basis for our conclusions in accordance with the
International Standard on Assurance Engagements 3000 (Revised) –
“Assurance Engagements other than Audits or Reviews of Historical
Information”. We have not performed an audit, and therefore do not
express an audit opinion, in accordance with International Standards
on Auditing (UK and Ireland).
We believe that our work provides a reasonable basis for our
conclusions.
Considerations and limitations
The Group’s governance measures to ensure compliance with the
Undertakings represent a set of internal controls and other actions
designed to provide reasonable assurance regarding compliance, in
all material respects, with each of the Undertakings and to support
reporting of compliance with those Undertakings. Further, the EAB’s
governance measures to monitor, assess and report on the Group’s
compliance with the Undertakings represent a set of internal controls
and other actions designed to provide reasonable assurance
regarding the assessment of compliance, in all material respects, with
each of the Undertakings. Because of the inherent limitations in any
set of internal controls, for example the degree of judgement
required in applying certain controls, internal controls may not
prevent, detect or report non-compliance with the Undertakings.
Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may have become inadequate
because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
This report, including the conclusion, has been prepared for and only
for the EAB and Ofcom for the purpose of allowing the EAB to meet
its requirements under the Undertakings and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
52
EAB Annual Report 2009
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Conclusions
In our opinion:
the EAB’s Opinions, shown in bold italic text on pages 48 and 50
of ‘How we formed our opinions’ and in respect of delivery of the
Undertakings during the year ended 31 March 2009 shown in the
tables on pages 49 and 50 of ‘How we formed our opinions’ are
fairly stated in accordance with the Reporting Policy;
the EAB Annual Report for the year ended 31 March 2009 is
consistent with the Ofcom Report;
the WLR3 Analogue Provision Performance – Basic Product,
SMPF Provision Performance – Basic Product, SMPF LLU
Migration Performance, Wholesale Extension Services Provision
Performance, Wholesale Extension Services Repair Performance
and IPStream Connect Provision Performance shown on pages 21,
22 and 23 are properly prepared in accordance with the
Reporting Policy; and
nothing has come to our attention to indicate that the remainder
of the EAB Annual Report for the year ended 31 March 2009 is
inconsistent with the findings of our work.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 May 2009
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Glossary
21CN
BT’s 21st Century Network programme
BES
Backhaul Extension Service
BT CPs
BT Global Services, BT Retail and (in some cases) BT Wholesale
BTL
Bulk Transport Link
CCD
Customer Committed Date
Consult 21
BT’s 21st Century Network consultation programme and steering group
CoP
Code of Practice
CSP
Customer Service Plan
CPs
Communications Providers
EAB
Equality of Access Board
EAO
Equality of Access Office
EBD
Ethernet Backhaul Direct
EMP
Equivalence Management Platform
EoI
Equivalence of Input
FTTC
Fibre-to-the-Cabinet
FTTP
Fibre-to-the-Premises
GEA
Generic Ethernet Access
IBMC
Installed Base Migration Complete
ISDN
Integrated Services Digital Network
KPI
Key Performance Indicator
LLU
Local Loop Unbundling
Market One
Areas in which BT is the only operator
Market Two
Areas where there are two or three operators (including BT)
Market Three
Areas where there are four or more operators
MIS
Management Information Systems
MPF
Metallic Path Facility
MSIL
Multi-service Interconnect Link
NGA
Next Generation Access
NGN
Next Generation Network
NGNuk
Independent NGN industry body
Non-BT CPs
Communications Providers external to BT
OSS
Operational Support Systems
OTA2
Office of the Telecommunications Adjudicator
PSTN
Public Switched Telephony Network
PwC
PricewaterhouseCoopers
RFS
Ready for Service
SLA
Service Level Agreement
SMP
Significant Market Power
SMPF
Shared Metallic Path Facility
SoR
Statement of Requirements
WBC
Wholesale Broadband Connect
WBCC
Wholesale Broadband Connect Converged
WEES
Wholesale End-to-End Ethernet Service
WES
Wholesale Extension Service
WLR
Wholesale Line Rental
WLR3
An EoI version of Wholesale Line Rental
EAB Annual Report 2009
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Registered office: 81 Newgate Street, London EC1A
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Please recycle
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BT Group PLC
Registered Office: 81 Newgate Street, London EC1A 7AJ
Registered in England and Wales No: 4190816
Produced by the Equality of Access Office