Annual report 2007
BT Group plc
Contents
Chairman’s introduction
1
Review of the year
2
The Undertakings Governance Framework
4
The EAB
BT’s approach to Undertakings delivery
BT’s Undertakings delivery performance
8
Major Milestones
Ongoing obligations
Product KPI monitoring
Monitoring of exemptions and variations
Measuring behavioural change
15
The EAB’s Behavioural Dashboard
Drivers
Activities
Outcomes
Ongoing improvements
Looking to 2007/08
19
About this report
21
PwC’s assurance opinion
23
Terms used in this report
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 2007. Unless otherwise stated all facts, statistics, events or developments are correct to the nearest
practical date before 10 May 2007. 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.
Introduction
Chairman’s introduction
The Equality of Access Board (EAB) was set up to monitor,
report on, and advise BT regarding the implementation of
the Undertakings – the new regulatory regime agreed by
Ofcom and BT in September 2005.
Twenty months on, BT has delivered a number of major products
designed to enable equivalence for Communication Providers (CPs),
and for BT’s own retail businesses.
I thank my fellow EAB members for their diligence and insight. We
have been ably supported by the Equality of Access Office (EAO) and
the EAB Secretariat.
The EAB has built on the foundations laid in its first few months of
operation. Our validation process has become more thorough,
particularly in the definition of success criteria. We have had to
decide on potential breaches of the Undertakings, and ensure that BT
took appropriate steps to remedy them subsequently.
Now, the EAB will focus on BT’s delivery of the Wholesale Line Rental
(WLR) products and ongoing compliance with the increasing number
of milestones already delivered. We will also look at the impact of the
Undertakings on behavioural change, as well as putting a focus on
the Undertakings obligations regarding Next Generation Networks
(NGNs). The pace and nature of progress in these areas will illustrate
whether the Undertakings are becoming ‘business as usual’ for BT
and the industry.
This year, we have given particular focus to understanding and
assessing the operation of Openreach, which lies at the heart of BT’s
new relationship with CPs. The Openreach CEO met the EAB regularly
to explain the annual operating plan, Openreach’s response to
service challenges, the development of the Equivalence
Management Platform (EMP) and plans for influencing employee
behaviour.
Carl Symon
EAB Chairman
10 May 2007
Generally CPs are realistic about
the challenges faced by BT as well
as the progress being made
We have listened to industry views about the impact of the new
regulatory regime on their operations, and have found that generally
CPs are realistic about the challenges faced by BT as well as the
progress being made. The EAB has found interaction with industry to
be helpful in focusing its discussions with BT.
In the autumn, BT reviewed the EAB’s operations with Ofcom, as
required by the Undertakings. The conclusion was that the three
main parties interested in BT’s delivery of the Undertakings –
industry, Ofcom and BT – feel that, on the whole, the EAB has been
useful and effective.
Equality of Access Board 1
Introduction
Review of the year
The EAB completed its first full year of monitoring BT’s compliance
with the Undertakings, including implementation of major product
milestones and a detailed assessment of employee behaviour. The
views in this report are based on the EAO’s validation work, reviews
conducted on behalf of the EAB and meetings with a variety of
stakeholders including BT, CPs and Ofcom.
Delivery of major milestones
BT had to deliver several significant milestones during 2006/07.
Many were met successfully: the EAB confirmed delivery of installed
base migration complete (IBMC) for BT’s relevant retail broadband
service in December 2006 and it validated delivery of Wholesale
Extension Service/Backhaul Extension Service (WES/BES). This
obligation was delivered in September 2006, although there
remained some wider concerns among CPs regarding BT’s Ethernet
portfolio. Other successful deliveries included improved access to
engineering appointment books and the separation of Management
Information Systems (MIS). BT went beyond the Undertakings
requirement for analogue Wholesale Line Rental (WLR) service
transfer requests by implementing this process for all customers
rather than just new customers.
Some milestones were missed altogether, or not delivered in their
entirety. In January 2007, the EAB confirmed a non-trivial breach of
IPStream IBMC, which was not achieved on 31 December 2006.
BT asserts that mass migration of customer records was achieved by
20 March 2007. The EAB will assess full delivery in 2007/08.
The EAB confirmed that BT did not achieve the good faith date of
31 December 2006 for supplying all BT New End Users using the
Equivalence of Input (EoI) WLR analogue product. The EAB believes
that this reflects the ambitious nature of the voluntary commitment.
As a result, BT will pay the agreed allowances to CPs.
BT’s delivery of its initial equivalence obligation on Local Loop
Unbundling (LLU) was not complete. The EAB concluded that the
30 June 2006 deadline was largely met, except for a small number of
orders which should have been processed equivalently. This
constituted a trivial breach of the Undertaking. The EAB did not
recommend any remedial action as BT had begun system
development to process all orders using the new equivalence
platform. BT also offered allowances to all eligible CPs.
A summary of BT’s delivery of key milestones during 2006/07 is
shown in the chart below. It demonstrates that the majority were
delivered on time, although three were missed. The outcome of those
still under review will be reported via the EAB’s website when validated.
2 Equality of Access Board
BT’s Delivery of key Undertakings Milestone to 31 March 2007
3
3
24
Delivered on time
Not delivered on time
Still under review
Source: EAO
Monitoring ongoing obligations
The EAB is focusing increasingly on monitoring BT’s compliance with
ongoing obligations associated with the Undertakings. Compliance
with these is assessed through the EAO’s Audit and Validation Plan,
and through specific reviews in particular areas. The EAO has
reviewed Partial Private Circuits transparency, Openreach Internal
Trading arrangements and access controls for IPStream ordering.
Improvements to reporting of Product KPIs
BT has adopted the improvements to its external reporting of
Product KPIs recommended by the EAB in last year’s report,
including the publication of statistical significance measures and
additional commentary.
Introduction
Not all SMP products covered by the Undertakings have passed EoI
milestones. Of those that have, there are some differences in the
levels of service provided to BT CPs compared with non-BT CPs.
These are due to a range of factors including the mix of order types
placed by different CPs and how CPs’ own processes identify and deal
with items such as faults.
Breaches of the Undertakings 2006/7
2
Increased focus on behaviour
4
New measures were developed in late 2006 to record changing
behaviour in BT following the introduction of the Undertakings.
These include the impact of the Code of Practice, customer
satisfaction scores, system access data, product development
measures, complaints and breaches. Initial analysis of these
indicators shows a number of positive developments, and room for
improvement in other areas.
For example, the chart below shows a year-on-year improvement
in the number of BT employees and team members completing their
Code of Practice training – a measure of progress towards BT
employees acting in the spirit of the Undertakings.
Code of Practice Training completion rate
1
2
Information sharing
Product milestones
Equivalence of Input
Control of Openreach assets
Source: BT
% Actual completions
100
The review of the EAB’s role by Ofcom and BT in October 2006 found
that the EAB was operating satisfactorily, and that no modifications
were required.
An independent report from PricewaterhouseCoopers LLP (PwC),
including its opinions on specific elements of this report, can be
found on p23.
95
90
CP engagement
85
80
Managers
Team Members
March 2006
March 2007
Source: BT
Governance developments
There were a number of changes to the processes supporting the
delivery of the Undertakings. The EAB proposed improvements to
BT’s complaints handling process and these were adopted by
December 2006. The EAB improved its validation processes and the
transparency of its public reporting.
Nine breaches were identified and reported during 2006/07. The
chart opposite shows the different categories of reported breaches.
The largest proportion involved information sharing, although the
number of breaches reported in this area was still small. Two of the
breaches were non-trivial, the rest were trivial.
The EAB received its first complaint from a CP regarding
Wholesale Line Rental (WLR3) contract conditions in August 2006. It
did not uphold the allegations by IDT Direct Limited (trading as
'Toucan') that intellectual property rights (IPR) clauses in the new
WLR3 contract would preclude EoI.
The EAB invited five CPs to its meetings in 2006/07. These were
Thus, Carphone Warehouse, Easynet, Tiscali and Cable & Wireless.
They covered topics such as progress towards the delivery of BT’s
21st Century Network (21CN), the delivery of products within the
Ethernet portfolio and their relationships with Openreach and BT
Wholesale. The EAO also routinely met CPs and reported any
significant findings to the EAB.
CPs have told the EAB and the EAO that the introduction of
newly-equivalent products by BT can require costly and timeconsuming systems changes by CPs in order to use those products.
BT’s ability to deliver on time and in line with the expectations
created by the Undertakings has proved to be an important factor in
establishing and maintaining industry confidence.
Focus for 2007/08
In 2007/08, the EAB will continue to focus on monitoring the
delivery of key milestones, including the obligations on WLR. The
EAB will focus also on BT’s ongoing compliance, with emphasis on
Product KPIs and behavioural measures. The EAB’s monitoring of the
delivery of Undertakings obligations for NGN began in 2006 and will
gain prominence in 2007/08. The EAB will also assess the impact on
Undertakings compliance of the recently announced changes in BT’s
business structure.
Equality of Access Board 3
Governance
The Undertakings
Governance Framework
The EAB is a key element in BT’s governance arrangements for
monitoring and reporting compliance with the Undertakings. This
section describes the work of the EAB and EAO, with a focus on
developments during the year. It also covers BT’s governance
arrangements associated with the Undertakings.
1.
2.
3.
The EAB
The EAB was established on 1 November 2005 and there has been no
change in membership during its first full year of operation. The
members are:
1 Carl Symon, Chairman of the EAB
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, including
Chairman and Chief Executive Officer of IBM UK. Carl is chairman of
HMV Group and a non-executive director of Rolls-Royce and Rexam.
2 Sally Davis, BT senior manager
Sally Davis was appointed as BT’s Chief Portfolio Officer in May 2005. She
had previously held several senior executive roles within BT since joining
the company in 1999. Before joining BT, Sally built start-up companies
and held leading roles in several major communications companies,
including Bell Atlantic in the US and Mercury Communications in the UK.
She is a Fellow of University College, London.
3 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)
4 Equality of Access Board
4.
5.
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 qualified Chartered Accountant.
4 Stephen Pettit, Independent
Stephen Pettit is a non-executive director of National Grid plc,
National Air Traffic Services and Halma plc. He is Chairman of ROK 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 KBC Advanced Technologies plc and
Norwood Systems Limited.
5 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.
Governance
Management reporting
Ofcom
EAB
BT Group plc Board
Compliance oversight
Compliance reporting
Public reporting
BT CEO
Operating Committee
Openreach CEO
Wholesale CEO
Retail CEO
Global Services CEO
Group functions
The EAB’s role within BT’s reporting structure
How the EAB works
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 to monitor compliance with the
Undertakings. Its position in BT is outlined in the diagram above.
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 EAB is supported by the EAO and the EAB Secretariat on all
matters within its remit. The EAO reports monthly 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. During the last
year, the EAO has developed aspects of its monitoring activities to
ensure greater rigour.
The EAB Secretariat organised eight EAB meetings and enabled the
EAB to receive a wide range of input to its deliberations, including
direct engagement with senior executives from several non-BT CPs,
the new Ofcom CEO and the Chairman of NGNuk. EAB minutes have
been provided to Ofcom as required and the EAB Chairman regularly
reported the EAB’s views to the BT Group plc Board.
The EAB Secretary conducted a board effectiveness review (a
survey of individual EAB members) in autumn 2006. All individual
EAB members were satisfied with the quality of information received
from within BT, and with the Board’s access to senior executives.
The EAO Director has reported to the EAB that he has had no
concerns about the resourcing of his department by BT. The EAB has
11 dedicated support staff, nine in the EAO and two in the EAB
Secretariat. The EAO post of Complaints Manager continues to be
unfilled in light of the EAO only receiving one complaint during this
year. The EAB judges that BT has continued to provide satisfactory
resources for the fulfilment of its remit.
Developments this year
The EAB governance arrangements have been strengthened over this
period. An ongoing monitoring plan, covering all Undertakings has
been established and is operational. The breaches and complaints
processes have been used in practice and increased engagement with
non-BT CPs has enabled the EAB to gain a more rounded view of BT’s
delivery of the Undertakings.
Last year’s EAB report described the monitoring and reporting
processes in detail, including the monthly cycle of data collection and
analysis carried out by the EAO. For more information, see
http://www.bt.com/eab.
Improvements to EAB monitoring
The EAB has strengthened its approach to validating the delivery of
major Undertakings milestones and its monitoring of ongoing
compliance. In particular, the milestone validation process involves
more rigorous testing by the EAO of BT’s evidence that it has satisfied
previously agreed success criteria for delivery of an Undertaking.
There are also better defined specifications for ongoing compliance
audits required by the EAO.
Openreach and the EAB
Openreach is the BT Line of Business (LoB) with principal
responsibility for the delivery of products with a requirement
for Equivalence of Input. It does this primarily via its
Equivalence Management Platform (EMP) and through its
control of the local access and backhaul networks. Each CP
that has met with the EAB over the year has provided a
perspective on how effectively Openreach is fulfilling its role.
The EAB has also met regularly with the Openreach CEO, to
review progress.
The EAB monitors a number of requirements associated
with Openreach’s operations and governance. This includes
the location of the Openreach HQ management team in
access-controlled accommodation separate from other parts
of BT and the obligation to establish a separate annual
operating plan. The EAB is generally satisfied that Openreach
has complied with the Undertakings relating to its operations
and governance, although some breaches have occurred.
The EAB has also reviewed Openreach’s service provision,
especially where this might have an impact on delivery of the
Undertakings. Openreach has provided information on its
service improvement plan – implemented in October 2006 to
address outstanding repair work – and on the actions it took
to restore service following extreme weather conditions in
December 2006 and January 2007.
Equality of Access Board 5
Governance
The EAB’s validation process
The EAB and BT have identified four broad categories of success
criteria – product, process, people and systems – which are applied to
all major deliverables. Each of these categories is populated and
agreed in advance for each Undertakings deliverable. Examples of
more detailed criteria under these headings include the existence of
an operating model for equivalence, signed-off and in use by BT
(product), inter-LoB trading agreements agreed and in use (process),
evidence of training documentation and delivery (people) and
operational readiness testing (systems).
The EAB and EAO have learnt and applied lessons from each
validation of a major product milestone. For example, the validation
of the LLU RFS commitment highlighted the need for certainty over
the precise interpretation of the full Undertakings requirement. The
EAB’s opinion on BT’s delivery of this Undertaking is set out on p9.
The EAO has also developed an Audit and Validation Plan (AVP).
This is designed to ensure a rigorous approach is taken to the
monitoring and reporting of all deliverables and ongoing
compliance. This takes account of any exemptions from or variations
to the Undertakings.
The EAO established a ‘Quick Checks’ process in 2006 to ensure
that all issues raised by CPs or internally would be assessed to
determine if they required further investigation. The chart below
shows that the EAO conducted a total of 70 Quick Checks in
2006/07. Of these, 50% were raised directly by external CPs. One
Quick Check – of information available on the Openreach internal
website – resulted in the EAO notifying the EAB formally of a trivial
breach of the Undertakings. Almost a quarter have led to the EAB or
the EAO recommending actions to BT, many of which involved BT
explaining its policies or its approaches to delivering specific aspects
of the Undertakings to CPs.
Outcome of EAO Quick Checks 2006/07
4
5
4
13
Complaints and breaches
During 2006/07, the EAB received one complaint from a CP, which
was not upheld.
The EAB’s first complaint
In August 2006, the EAB received its first formal complaint
from a CP. IDT Direct Ltd (trading as ‘Toucan’) alleged that IPR
provisions in Openreach’s draft contract for the EoI version of
Wholesale Line Rental (known as WLR3) would breach EoI
requirements.
Following an EAO investigation, the EAB concluded that
the allegation was unfounded. The future terms and
conditions under which Openreach will trade with BT and
non-BT CPs are the same. In addition, the EAB confirmed that
the definition of EoI does not require that the impact of such
terms and conditions should be identical for all CPs.
The complaint provided the first test of the EAO’s
complaints handling arrangements. In this case, the EAB did
not uphold the complaint, however its consideration led BT to
look at the governance arrangements around these clauses,
and to address any negative perceptions about the operation
of such clauses in the future.
The EAO communicated the EAB's findings to IDT. In light
of the company's expressed dissatisfaction with the outcome,
the EAO Director met with IDT to explain the evidence and
arguments underpinning the EAB's decision.
BT and the EAO have processes for assessing potential breaches of
the Undertakings and for reporting them to the EAB. During
2006/07, the EAB confirmed nine breaches of the Undertakings. BT
has reported seven breaches. The EAO has assessed five cases,
including one CP complaint, and reported two breaches. Six possible
breach cases raised during the year were still under consideration by
BT and the EAO had no outstanding cases when this report was
approved.
The table below summarises the non trivial breaches identified
during the year:
Undertaking
Details
Identified by
Remedy
3.1.1 in
respect of
IPstream
IBMC
BT had migrated less than
a third of end users by the
milestone date.
BT
BT reported that
99% of users were
migrated by the end
of March 2007.
44
Not yet validated by
EAB.
5.12
Not applicable to the
Undertakings
Actions recommended to BT
Referred to potential breach
process
EAO Review initiated
Issues explained to CPs but no
action recommended to BT
Source: EAO
Some Quick Checks have also resulted in the EAB’s requesting that
the EAO conducts a more detailed review of the issues raised. This
year the EAO has completed reviews of the management of the
boundaries between Openreach and BT Wholesale, customer
business management, Annex 2 processes and compliance with BT’s
Code of Practice. See the Delivery and Behaviour sections for more
information.
6 Equality of Access Board
Due to a historical
process, BT Global Services
engineers had been
performing single-line
shifts
BT
BT has reported that
it is putting remedies
in place.
Remedial action to
be validated in due
course by EAB.
Governance
In addition there were a number of trivial breaches identified during
the year by BT and the EAO. Those identified by BT were:
Use by BT Wholesale for price publication purposes of an
administrative team and system located in BT Retail which
involved inappropriate disclosure of BT Wholesale information;
Inappropriate access on a limited number of occasions to
Openreach and BT Wholesale information by one team dealing
with customer complaints about broadband;
Granting by Openreach of an LLU provisioning escalation request
made by a BT Global Services employee outside of the process
available to all CPs;
Disclosure of Openreach commercial information to one CP, rather
than to all CPs, in the course of the Openreach Statement of
Requirements process;
BT Wholesale planners outside of London were able to use a process
that was not controlled by Openreach to allocate space on an MDF.
Those identified by the EAO were:
A small number of orders for New End Users were not processed
equivalently after the RFS date for SMPF (see Delivery section for
more information);
An instance of inappropriate disclosure of information by
Openreach on an intranet page accessible by BT people outside
Openreach.
The EAB has validated BT’s remedies for trivial breaches identified
before January 2007 and will review the remainder early in 2007/08.
Review of the EAB
A year after the EAB was established, and as required by the
Undertakings, BT conducted a review with Ofcom of the operation of
the EAB which included an opportunity for industry input. The EAB
was provided with a full copy of the resulting report in November
2006 and a summary of BT’s report was published by Ofcom in
February 2007. The report demonstrated confidence from the EAB’s
stakeholders, and included suggestions for greater EAB focus and
engagement. No further formal reviews of the EAB are required by
the Undertakings.
BT’s approach to Undertakings delivery
BT’s governance arrangements associated with the Undertakings have
improved significantly in the past year. Areas of weakness identified in
last year’s report, such as complaints handling, have been addressed.
BT’s Undertakings delivery programme
BT’s governance framework consists of the following three key
components:
The Group Undertakings Forum (GrUF) is a steering forum with
responsibility for setting direction;
The Group Programme Board’s role includes managing priorities,
resolving issues and ensuring cross LoB consistency;
The Group Programme Office supports the GrUF and the Group
Programme Board by providing regular programme reporting and
offering expert help and guidance to individual programme
delivery teams.
Each LoB also has its own Undertakings delivery programme office
which reports into the Group Programme Office. The LoB team
reports directly to the EAO in response to requests for monitoring
information and clarification of issues raised through the EAO’s
validations and Quick Checks process.
Over the year, BT has demonstrated stronger cross business
coordination of major deliverables. It established BT-wide
implementation teams for MIS systems separation and IPStream
consuming LLU. However, since three key milestones have been
missed and some aspects of delivery have been incomplete, in the
EAB’s view, there could have been better coordination between the
LoBs for the delivery of key Undertakings (see Delivery section for
more information).
BT’s handling of complaints and breaches
The EAB found initially that BT’s complaints handling arrangements in
relation to the Undertakings were unclear to CPs, inconsistent across
the business, and lacking in transparency. BT acted on the EAB’s
suggested improvements with proposals for a consistent definition of
complaints across BT, central logging of all complaints and reporting of
these to the EAO, and referencing the role of the EAB and EAO in the
process. By December 2006, the EAB agreed that BT had satisfactorily
implemented all of the proposed improvements.
The EAB is satisfied with BT’s management of internal complaints
through the confidential helpline and it receives quarterly
monitoring data on the volume, focus and outcome of complaints.
Over the year, BT has reported to the EAB that it closed 28 CP
complaints about BT’s delivery of the Undertakings and six internal
employee complaints.
At the time of last year’s report, BT had a process in place to
consider potential breaches of the Undertakings, but none of the
matters put through it were classified as breaches. A year on, several
breaches have been identified and some matters are still under
investigation (see p6). BT has kept the EAB informed of its findings on
the potential breaches that have been investigated. The process has
worked well and ongoing improvements have been made to the
associated investigation and reporting processes. The EAB has
monitored BT’s implementation of remedial actions following a breach,
as well as ongoing compliance activities to prevent further breaches.
Implementation of the Undertakings in Northern Ireland
BT has an obligation to implement aspects of the Undertakings in
Northern Ireland although its operations there are not affected by
the structural provisions, and it continues to function as a single
integrated unit. In April 2006, BT Northern Ireland and BT Ireland
were brought under a single management structure. However, BT
Ireland (North) has maintained a programme office to manage and
report on its delivery of the Undertakings.
Various developments have led to an improved approach to BT’s
governance and oversight of the Undertakings in Northern Ireland.
In April 2006 a Regulatory Compliance Committee was established to
coordinate the delivery of the Undertakings on which the EAO – and
more recently, non-BT CPs – have been granted observer status.
BT has also participated in the Northern Ireland Telecoms
Stakeholder Forum established by Ofcom and has provided effective
quarterly reporting to the EAO on Undertakings delivery.
Variations and Exemptions
Between September 2005 and December 2006, Ofcom and BT agreed
variations to the Undertakings. These variations included time
extensions to agree whether or not EoI should apply to various
products, the publication deadline for the EAB annual report and a
variation to specify the requirements in respect of MIS separation.
Details and the full text of these variations are published online by
Ofcom at http://www.ofcom.org.uk/telecoms/btundertakings/
exemptionsandvariations/.
Ofcom is responsible for agreeing exemptions and variations to the
Undertakings, and the EAB monitors BT’s subsequent compliance with
any additional obligations arising from the exemption process or the
amended or varied Undertakings (for example, the obligation to
withdraw ISDN Connect from new supply by 31 August 2006). Further
information on the EAB’s monitoring of exemptions and variations can
be found at http://www.bt.com/eab.
Equality of Access Board 7
Delivery
BT’s Undertakings
delivery performance
The Undertakings require BT to deliver a number of product-related
obligations which are monitored by the EAB. This year saw a number of
complex product and systems deliveries that challenged BT in terms of
timing, scale and resource. Progress is charted in four main areas in this
section. These are delivery of major milestones, ongoing obligations,
Product KPIs and monitoring of variations and exemptions.
Major milestones
Local Loop Unbundling and IPstream portfolio
The Local Loop Unbundling (LLU) and IPstream portfolio enables BT
CPs and non-BT CPs to lease local loop infrastructure to offer
telephony and broadband services to end users. To provide their own
broadband service, some CPs purchase LLU from Openreach whilst
others purchase IPStream from BT Wholesale. IPStream uses LLU as
an input product, but includes more of BT’s network and
functionality in the service. BT has a number of obligations with
regards to the LLU and IPStream product portfolios in order to offer
equivalent services to BT CPs and non-BT CPs. The building blocks of
these products are shown in the diagrams below:
LLU and IPStream
MPF
VOICE
NETWORK
CP
DSLAM
BES
CP
NETWORK
MDF
LLU(MPF)
WWW
BT LOCAL EXCHANGE
SMPF
voice
switch
MDF
LLU(SMPF)
BT
TELEPHONY
NETWORK
CP
DSLAM
BES
CP
NETWORK
WWW
BT LOCAL EXCHANGE
IPStream
voice
switch
MDF
IPStream
using
LLU(SMPF)
BT
TELEPHONY
NETWORK
BT
DSLAM
BT DSL
NETWORK
BT LOCAL EXCHANGE
CP operated service
8 Equality of Access Board
Openreach operated service
BT Wholesale operated service
Customer wiring
WWW
Delivery
LLU EoI Ready for Service (RFS) (30 June 2006)
The LLU obligations are second in size only to the WLR obligations
(covered on p11). LLU includes both Shared Metallic Path Facility
(SMPF) and Metallic Path Facility (MPF) products, and the
Undertakings required BT to reach RFS for MPF and SMPF by
30 June 2006.
The EAB validated BT’s delivery of LLU RFS in October 2006. BT
had earlier indicated that it might miss the milestone by several
weeks. Instead, the new Equivalence Management Platform (EMP)
platform over which MPF and SMPF operate was in place and
capable of taking orders from the RFS date although it was only
required to handle low volumes.
By the same date, the Undertakings also required BT Wholesale to
be using LLU as an input to the IPStream product for new customers
to BT. The delivery of both LLU RFS and IPStream using LLU as an
input had been reported previously as two separate obligations.
However, the EAB recognised after its October 2006 validation that
both formed part of the LLU RFS obligation.
The EAB found that in delivering IPstream using SMPF, BT
Wholesale did not handle all IPStream orders on an EoI basis and was
therefore in trivial breach of the LLU RFS obligation. It found that a
certain class of IPStream orders from new customers to BT were not
processed using the EMP. Although this issue continued for several
months, the numbers involved were small.
The EAB did not recommend any remedial action as BT had begun
system development to process all IPStream orders using EMP. It
completed the work in December 2006 and this was verified by the
EAB in January 2007. BT also offered allowances of 25 pence per
month per SMPF line to all eligible CPs.
The EAB has recommended that BT continues to focus on
improving the reliability and functionality of the EMP platform
following the trivial breach.
IBMC for IPStream using LLU as an input (31 December 2006)
The LLU RFS milestone of 30 June 2006 required all new end user
orders to be processed on an EoI basis. The corresponding IBMC
required IPStream to use LLU (either MPF or SMPF) as an input for all
existing end users by 31 December 2006. This involved transferring
8.9 million IPStream records from legacy systems onto new EoI
systems and processes. The obligation to transfer IPStream records
was the first obligation to require the processing of a high volume of
orders using the EMP platform.
BT stated that it did not achieve the Installed Base Migration
Completion (IBMC) milestone of 31 December 2006 for IPStream
consuming SMPF. By that date only 2.7 million customer records had
been transferred to the EMP. BT formally notified the EAB of this
breach in January 2007, and the EAB confirmed this breach as nontrivial. BT Wholesale said that it had refrained from more rapid
transfers because it did not want to jeopardise customer service
levels at a time when it was also encountering a high number of
service issues.
BT has informed the EAB that it achieved mass migration for
SMPF on 20 March 2007 ahead of the revised target date of
31 March 2007. It also asserted that it had met the original IBMC
milestone for MPF, which involved much smaller volumes of
customers. The EAB will assess full delivery in 2007/08.
IBMC for BT’s relevant retail broadband service
(31 December 2006)
This Undertaking required the installed base of BT’s retail broadband
service to be migrated by 31 December 2006 so that all services used
the EoI IPStream product. BT was also required to ensure that its
retail agents were using EoI systems and processes for all broadband
transactions. In January 2007, the EAB confirmed that BT had
delivered IBMC for retail broadband by the required date and had
also delivered some elements ahead of schedule.
The Equivalence Management Platform (EMP)
The EMP is the strategic system designed to handle the majority of transactions for EoI products. It links a number of specific EoI
product systems. The first product to be made available on the platform was LLU in June 2006 and other EoI products are being
added to it gradually. The next major EoI product delivery milestone over EMP is WLR RFS.
The testing, implementation and deployment of the EMP has been a major cause for industry concern reported to the EAB with
recurring problems leading to system downtime. Some CPs have told the EAB that this downtime has made them reluctant to migrate
to the new platform. In response, BT has reported that Openreach is working with CPs to inform them of planned system outages
ahead of schedule.
The EMP will replace so-called ‘tactical’ BT systems – such as Line Share Automation (LiSA) – that pre-date the Undertakings.
Openreach has told the EAB that it monitors the performance of the old and new systems and is working with CPs to manage issues
related to the new platform. There is some recent evidence of improved stability, although WLR RFS remains a significant test for
EMP.
Equality of Access Board 9
Delivery
Ethernet product portfolio
Ethernet services
BT EXCHANGE
BT EXCHANGE
WES
WES-LA
WEES
CP Eqpt
BES daisy chain
CP Eqpt
BES
CP NETWORK/
POP
Connects end user to CP
Connects BT exchange to CP
Connects end user to BT local exchange
Connects BT exchange to BT exchange
Connects end user to end user
This product set includes the Wholesale Extension Services (WES) and
Backhaul Extension Services (BES) products which are based on
Ethernet technology. The Undertakings contain several obligations
which require BT to launch EoI versions of various new and existing
products. The volumes involved are smaller than those of IPStream
consuming LLU or WLR but are of critical importance to many CPs.
In January 2007, the EAB confirmed that BT had provided EoI
versions of WES and BES by the RFS date of 30 September 2006.
BT’s delivery of EoI for the WES and BES product sets was made using
the existing tactical order and fault handling systems for extension
services (e-Co X), and not via the strategic EMP system. The EAB
shares Ofcom’s view that BT should aim to move the Ethernet
product set to the EMP system as soon as possible.
BT was also required to launch an EoI WES Backhaul (WES B)
service by 30 September 2006. Following consultation with industry
and Ofcom, Openreach decided that the launch of WES B could be
achieved by adding an additional variant to the BES EoI product set
(known as ‘BES daisy chain’). The WES B product launch was
confirmed by the EAB.
10 Equality of Access Board
Two further EoI Ethernet products are covered in the Undertakings
but do not have specific delivery dates. The EAB confirmed that BT
had launched the EoI Wholesale End-to-End Ethernet Service
(WEES) on 30 September 2006 and the EoI WES Access product
(WES-LA) in December 2006.
In response to a concern raised by one CP, the EAB examined
whether Openreach had acted appropriately in launching the WEES
product in advance of WES-LA, particularly given that BT Global
Services was a major user of the WEES product. The EAB found that
the forecast demand for WEES was greater and more certain than for
WES-LA, therefore it was reasonable to launch it first. In response to
requests, Openreach brought forward the WES-LA launch date to
within three months of WEES. The EAB will monitor progress with
these two services during 2007/08.
BT is also required to deliver IBMC for Wholesale Extension
Services by 31 March 2007. This Undertaking required the installed
base of BT’s relevant retail Ethernet-based local area network
extension services to be migrated so that they all used the EoI WES
service. The validation of this Undertaking is currently underway.
Delivery
WLR product portfolio
The Wholesale Line Rental (WLR) portfolio includes Analogue,
ISDN2 and ISDN30 products, although only the Analogue product
has milestones within this reporting period. WLR Analogue is the
product CPs use to offer telephony service and the Undertakings
require BT to use the WLR Analogue service to provide its own retail
telephony service. BT plans to meet this commitment by launching a
new EoI product variant known as WLR3.
WLR RFS “good faith gesture” (31 December 2006)
In November 2006, BT confirmed that it would not meet the good
faith gesture date of 31 December 2006 for WLR to be RFS. It was
concerned that the limited functionality of the WLR product would
lead to a deterioration in customer experience. BT began using the
EoI WLR service for a small number of its customers on 1 January
2007 but did not expect to serve all new end users this way until the
RFS date.
The formal delivery date for WLR RFS is 30 June 2007 and the
failure to meet the voluntary date of 31 December 2006 did not
constitute a breach. However, it did trigger the payment of the
associated allowances (25 pence per month per WLR line) by BT to all
eligible CPs.
Going forward, the EAB will monitor BT’s progress towards
achieving the formal WLR RFS date. At the time of this report, the
EAB believes there are significant risks associated with this milestone.
WLR Analogue service transfer requests (1 January 2007)
The Undertakings required that, from 1 January 2007, BT had to use
the WLR service provider gateway to raise WLR Analogue service
transfer requests. These transfer requests arise when BT takes over a
customer from another CP, and where that customer is not already a
BT customer for any other retail product. This Undertaking will be
superseded once WLR RFS is achieved in June 2007. The EAB
validated that this Undertaking was delivered and noted that BT had
implemented this process for all WLR Analogue customers and not
just new customers as required by the Undertakings. This means that
about 10,000 transfer orders per week are now being placed on the
standard industry Service Provider Gateway (SPG).
Management Information System (MIS) separation
(22 October 2006)
In October 2006, after consultation with industry, Ofcom amended
the Undertakings relating to MIS separation. An earlier variation of
the Undertakings in September 2006 changed the initial delivery
date from 22 September 2006 to 22 October 2006 to allow for
consultation on the variation. The key changes resulting from the
October variation were:
A definition of levels of incremental separation:
‘Level 1 System Separation’: the application of access rights
and controls to ensure that users have access only to data to
which they are entitled;
‘Level 2 System Separation’: separation of systems data and
separate iterations of the application software so that users
stay within their access rights.
Of the MIS systems shared between Openreach and the rest of BT,
36 were identified by BT to require Level 2 separation by
22 October 2006;
For the remaining 13 MIS systems, BT had to implement Level 1
separation by 22 October 2006 (to be tested by independent
external audit) and Level 2 separation by 30 June 2010. In the
interim BT must provide Ofcom with a roadmap setting out how it
will implement Level 2 separation.
The EAO completed a validation review of the Level 2 separation
of 36 systems and commissioned an independent assurance report
from PricewaterhouseCoopers LLP (“PwC”) in respect of the
implementation of Level 1 separation for the 13 systems. The scope
of PwC’s work was agreed in advance with the EAO.*
The EAB confirmed that BT had successfully delivered its amended
MIS separation obligations to date. However the EAB notes that tight
control of individual employees’ rights of access to the systems – a
process which may involve reliance on third party contractors – will
be critical to ensure effective separation remains in place.
Other BT deliverables
A number of key deliverables were delivered toward the end of the
last annual reporting period, but validated by the EAB in 2006-07.
These are described in the table below:
Undertakings obligation
Status
Areas in BT exchanges as a service
(22 March 2006)
The EAB has validated that this service – known as ‘NetLocate’ – was launched in March 2006. All CPs were invited to
participate in the creation of the terms and conditions of this service and a small number did so. Some CPs were
concerned that although the terms and conditions were sufficient for them to start using NetLocate, longer term
changes would be needed to enable high volume roll out. BT plans to review the situation with NetLocate customers in
July 2007 and notify them of the outcome later in the year.
List of exchanges to be vacated
(22 March 2006)
BT was required to provide Ofcom and CPs with a list of exchanges that it intends to vacate by 22 March 2006 in
accordance with its property strategy. The EAB has validated that this information was provided as required.
Contract management mechanism
(22 March 2006)
BT committed to setting up a mechanism to deal with issues surrounding terms and conditions relating to Significant
Market Power (SMP) products, excluding certain types of contractual provision. This is known as the Contract
Management Mechanism (CMM).
The EAB confirmed delivery of this Undertaking in July 2006, although it noted concerns from CPs about whether BT was
acting in the Spirit of the Undertakings.
In January 2007, BT and a number of CPs commenced a review of the CMM. Although the CMM had not been used, the
parties agreed that this was partly a reflection of earlier work to resolve potential CMM issues by other means before
resorting to the CMM process. In addition, the number of contract negotiations during the year was not large, and
therefore, potential to invoke the CMM process had been limited. Therefore the remainder of the review was limited to
finalisation of the arbitration process documents associated with the CMM and to confirm details for the next review of
the CMM.
* PricewaterhouseCoopers LLP ("PwC") will permit the disclosure of its report, to communication providers regulated by Ofcom subject to prior receipt of a hold harmless
letter (in a form specified by PwC) under which the communication provider agrees and acknowledges, inter alia, that PwC, its members, partners, employees and agents
neither owe nor accept any duty or responsibility to such third party.
Equality of Access Board 11
Delivery
Ongoing obligations
The EAB monitors two types of ongoing obligation. A significant
number of Undertakings do not have a set completion date and are
monitored on an ongoing basis. Others have set delivery dates but
require ongoing compliance from BT. The EAO monitors BT’s
compliance with these ongoing obligations by examining regular
monitoring reports from BT and by performing follow up checks,
reviews or audits.
Partial Private Circuit transparency
In its last annual report, the EAB reported that BT had delivered its
obligations to provide transparency around partial private circuits
(PPCs) and that it would monitor feedback from CPs. BT is required to
provide sufficient transparency to enable CPs to understand any
difference between the PPCs it sells to them compared to products it
supplies to its downstream divisions. It must then use reasonable
endeavours to resolve any issues that CPs raise as a result of these
differences. During 2006, the EAB maintained a dialogue with CPs
and BT over concerns related to transparency of PPC type network
elements as used in BT Internet Protocol Virtual Private Network and
Featurenet products. As a result of discussions over several months
BT provided additional information, particularly on costings. By
November 2006, the EAB found that these arrangements were
working satisfactorily.
Stand-alone Address Matching service
The validation of this Undertaking in January 2006 was reported in
last year’s report. Since then, the EAB has encouraged Openreach to
provide a measure to demonstrate that the number of address
matching failures has been reduced following the launch of the
stand-alone address matching service. The measure shows that the
proportion of successful matches is increasing. See chart below:
The EAB monitored BT’s retail divisions to ensure that robust
compliance monitoring and reporting mechanisms were in place to
detect potentially non-compliant access to IPStream and Ethernet
product set. Of the instances reported to the EAB between the
IPStream RFS and IBMC dates, a number related to the processing of
existing customers and therefore were compliant. The EAB will
continue to monitor the number of incidents and will investigate
further if necessary.
Openreach Internal Trading arrangements
The Undertakings require Openreach to have sufficient influence
over the assets it requires to deliver service, even if those assets sit
within BT Wholesale. One of the key ways of ensuring this is through
internal trading agreements and Service Level Agreements (SLAs).
These same agreements also help Openreach to manage and operate
at arms length from the rest of BT.
The EAB undertook a review of the arrangements that were put in
place for the first year of trading. On the whole, the EAB found the
agreements were satisfactory and seemed to be operating well. It
suggested development of additional detail around certain trading
activities. One specific issue raised by the review is still under
discussion with BT.
Wholesale Leased Line products
The Undertakings require BT to consult with CPs on parts of the
wholesale leased line portfolio to identify reasonable modifications
or enhancements. In 2005/06, BT consulted with its CP customers to
understand their requirements in relation to leased line products. The
review concluded that there was no customer requirement for an
additional set of leased line products managed by BT Wholesale. BT
has stated that as a result, it will not develop this product set,
although it will continue to monitor market requirements and assess
commercial opportunities as they arise.
Address matching service performance
% Successful Matches
100
90
80
70
60
50
40
30
Improved access to engineering appointment books
The EAB’s validation review in November 2006 noted a number of
issues that require ongoing monitoring. These include the
effectiveness, availability and timeliness of the new improved
engineering appointment process, and the need for improved
communications between Openreach and CPs when engineers arrive
at a CP’s customer premises to fulfil an appointment.
The EAB will conduct a further review of the operation of the
engineering appointment books facility and processes during 2007.
Product KPI monitoring
20
10
0
04/06 05/06 06/06 07/06 08/06 09/06 10/06 11/06 12/06 01/07 02/07 03/07
Source: BT
Openreach has confirmed that the address matching facility provided
by 31 December 2005 included a volume matching facility. As more
products are provided on an EoI basis, reliance on stand-alone
address matching will diminish.
IPStream EOI ongoing controls
BT has an ongoing obligation to manage information flows between
Openreach and BT’s downstream businesses (BT Retail and BT Global
Services). Many of BT’s downstream call centre agents can deal with
multiple services and products. This could lead to situations where
call centre agents use inappropriate information for the EoI element
of the transaction by looking at non-EoI product systems. These
possibilities are gradually being precluded by system changes and
management controls.
12 Equality of Access Board
Since January 2006, BT has met the requirements of the
Undertakings to publish Key Performance Indicator (KPI) information
each quarter. It has addressed the improvements to its external
reporting recommended by the EAB in last year’s report, including
the publication of statistical significance z-test charts and additional
commentary. BT has also sponsored an independent review of the
modified z-test statistical indicator of equivalence and this has led to
some changes to the approach.
How to understand the KPI graphs
The objective of the KPI graphs is to compare service provided to CPs
within BT with that offered to non-BT CPs for particular products. If
there are significantly differing service levels then the reasons behind
this are further investigated to understand whether it is due to noncompliance with the Undertakings or another cause.
There are two types of graphs. The preferred option is a graph that
uses a statistical method known as a ‘z-test’. If the volumes are low,
the z-test cannot be used reliably so the absolute volumes are
compared instead. The z-test graph includes control limits, shown on
the chart as two parallel lines and, if actual outcomes fall between
Delivery
During September 2006, the KPI results moved in favour of non-BT
CPs and subsequently remained that way. Analysis showed that the
fault clearance performance of the IPStream circuits consuming LLU
was worse than the performance of those that did not. As BT was the
main user of this type of circuit, this trend had a greater impact on
BT’s overall fault clearance performance than on that of other CPs.
Also, BT passes back to BT Wholesale a higher proportion of cleared
faults that fail to be cleared within the target timescales which leads
to extended clearance times and poorer fault clearance performance.
DataStream Provision
8
Non-BT CPs better
6
Pooled z-test score
the lines, there is no statistically significant difference between the
service levels experienced by BT CPs and non-BT CPs.
In the absolute volume graphs, the two lines representing the
performance of BT CPs and non-BT CPs can be seen directly and the
EAB can assess whether the difference between the two lines
requires further investigation. For each product, the performance of
provision (or fulfilment) and repair (or assurance) is monitored.
The comparison shown on the KPI graphs is only valid when the
product has passed its EoI milestone date. Once RFS has been
achieved, all new end users must be fulfilled on an EoI basis and so
the provision (ie new order) service levels may be examined.
However, not all orders are required to be on an EoI basis at this
point. Only once a product has passed both RFS and IBMC milestones
can provision and repair be examined on an EoI basis.
BT has transparency but not EoI obligations regarding Datastream
and Partial Private Circuits (PPCs) to ensure CPs can identify and
understand any differences in performance. The KPIs for Ethernet
products are not shown given their long delivery lead times as it is
too early to capture meaningful trends. The EAB monitors KPIs for
these products and will further investigate any significant differences
in performance levels.
4
2
0
-2
BT CPs better
IPStream Provision and Repair
-4
04/06 05/06 06/06 07/06 08/06 09/06 10/06 11/06 12/06 01/07 02/07 03/07
100
Provision
80
Pooled z-test score
60
Non-BT CPs better
Source: BT
BT CPs better
In early 2006, BT and non-BT CPs experienced different provisioning
levels. This was because of the high volume of orders to change the
speed of broadband lines. This was resolved from January 2006,
although in January and February 2007 non-BT CPs experienced
better performance. As this difference was temporary, no further
investigation has taken place although the EAB will continue to
monitor this KPI.
40
20
0
-20
-40
04/06 05/06 06/06 07/06 08/06 09/06 10/06 11/06 12/06 01/07 02/07 03/07
DataStream Repair
Provision
100
Repair
IPStream Provision
The results indicate that non-BT CPs have consistently received a
better provision service. BT Wholesale has provided analysis to the
EAB, showing that the differing mix of the eight underlying order
types was responsible. BT Retail uses a high proportion of
‘Simultaneous Provide of Telephony and Broadband’ order type
which is more complex and has a lower fulfilment performance.
Over the last twelve months the proportion of this order type has
continued to grow and was also the first order type to be processed
through the EMP, increasing the performance differential with CPs
further during that period.
IPStream Repair
Repair showed a performance favouring BT up to June 2006,
although the chart shows that this position was later reversed and
has consistently favoured non-BT CPs after August 2006.
Prior to June 2006, in comparison to other CPs, BT Retail was
submitting a high volume of very simple faults. These faults were
being closed within ten minutes, resulting in an artificially improved
fault clearance performance. BT introduced a plan to reduce the
number of faults passed to BT Wholesale and the KPI difference in
favour of BT was resolved after June 2006.
90
% Faults cleared on time
Source: BT
IPStream RFS date: 31 December 2005
Relevant BT Retail Broadband product IBMC: 31 December 2006
80
70
60
50
40
04/06 05/06 06/06 07/06 08/06 09/06 10/06 11/06 12/06 01/07 02/07 03/07
Non-BT CPs
Non-BT CPs 12 mth Avg
BT CPs
BT CPs 12 mth Avg
Source: BT
(Note: Repair volumes for BT are less than two hundred per month therefore the
z-test analysis has not been applied.)
Looking at absolute performance levels, the experience of BT CPs has
been broadly comparable with that of non-BT CPs. In November
2006, there was a one-off reduction in performance for BT CPs offset
by a move in the other direction in January 2007. Given the small
volumes, this does not appear to be of statistical significance
although the EAB will continue to monitor this area.
Equality of Access Board 13
Delivery
Partial Private Circuits (PPCs)
BT publishes KPIs for PPCs on its website on a quarterly basis, but the
EAB is unable to use these charts to reliably analyse the performance
experienced by BT CPs versus that experienced by non-BT CPs. This is
because BT CPs and non-BT CPs consume two different private circuit
products: non-BT CPs use PPCs to connect an end-customer to their
network, while BT CPs use Private Circuits (PCs) to connect one end
customer to another. BT has chosen to publish these graphs for the
sake of transparency and completeness.
Analysis of the KPIs comparing PPCs and PCs show that BT’s
quarterly provision experience is very similar to that of external CPs.
However, the repair KPIs show that non-BT CPs’ repair performance
is consistently better than the performance experienced by BT CPs.
These differences in repair performance appear to be a result of the
known product differences between PPCs and PCs.
LLU (SMPF and MPF)
Openreach launched the EoI versions of SMPF and MPF by 30 June
2006 and provision KPI data has been available to the EAB since that
date. However, there have been very small volumes of MPF orders so
far and this means that valid statistical analysis can be undertaken
only for SMPF Provision. BT has informed the EAB that it achieved
mass migration for SMPF on 20 March 2007, and that it had also met
the IBMC for MPF. Therefore, repair data is not yet available for these
products.
Conclusions regarding product KPIs
The product KPIs are an increasingly important monitoring tool for
the EAB. They provide a valuable overview of relative performance
which has allowed the EAB to ask for further analysis from BT to
identify and understand potential issues.
One area that requires some further development is migrations
between products or between CPs. The Undertakings require
products that have achieved EoI RFS to have an EoI Migration
process in place. They also require that the EAB “shall pay particular
attention to proposed KPIs for migrations…”. There have been
ongoing consultations between Ofcom, BT and industry during 2006
to agree the migration processes that should be used. Once the
outcome of these discussions is known, BT will be able to provide the
associated migration KPIs. The first migration KPIs are expected to be
available by May 2007. In the meantime, the EAO has proposed
interim measures for IPStream and Datastream migrations. These do
not currently indicate any matters of major concern.
Non-BT CPs have raised a number of questions regarding the
product KPIs. Some requested more detail on their own performance
in comparison to the aggregated data in the charts, or the
breakdown of the product KPIs into their component parts. Others
requested that BT provides more detailed commentary with its
quarterly KPI publication. BT continues to upgrade its reporting of
KPIs and has included the detailed commentary requested by CPs.
Monitoring of variations and exemptions
SMPF Provision using EMP
Modified pooled z-test score
10
Non-BT CPs better
0
-10
-20
BT better
-30
-40
11/06
12/06
01/07
02/07
03/07
SMPF Basic Provide
Source: BT
The SMPF basic provide graph shows that external CPs were
experiencing better performance at first. Analysis showed that this
variance could be due to the different order types used by BT and
non-BT CPs. The ‘Simultaneous Provide’ order type, which is subject
to poorer performance than a ‘standard’ new provide, was the main
BT order type. However since January 2007, the graph shows that
performance has improved in favour of BT CPs.
Data analysis and process investigation by BT has established that
the better performance experienced by BT CPs can be attributed to
BT Wholesale’s use of the new ‘flexible jumpering’ service being
offered by Openreach. Normally, jumpering takes place on the
Customer Committed Date (CCD). However, if CPs opt for flexible
jumpering, this work can be carried out in advance of the CCD
thereby shortening the provisioning time. Openreach has stated that
all CPs were informed of this new service, although to date no
non-BT CP has opted for flexible jumpering. The EAB is reviewing this
situation.
14 Equality of Access Board
The EAB has oversight of the variations and exemptions to the
Undertakings agreed by Ofcom and BT. During 2006/07, the EAB
confirmed that BT was complying with a number of the variations
and exemption agreements including Local Area Network Extension
Services2 (LES2), Megastream Ethernet, Openreach ancillary services
including ISDN Connect and provision of low-loss exchange lines.
Other Openreach ancillary services including temporary service, lines
at non-served premises and alternatively routed lines will be
reviewed following the launch of WLR3.
A number of obligations arising from the variations and
exemption agreements are scheduled to be delivered by BT over the
next few years, and the EAB will monitor BT’s compliance with these
obligations. These include the WLR-supplier-of-last-resort process
and the ISDN and Highway Conversion Process in 2007. Other
obligations due during 2008-2011 include Featurenet, 21CN
network uplift programme and Pay and Call.
Full details of the EAB’s work in this area can be found at
http://www.bt.com/eab.
Behaviour
Measuring
behavioural change
The EAB monitors behaviour associated with the Undertakings and
proposes behavioural measures and performance targets. It also hears
the views of communications providers (CPs) to assess the impact of
behavioural change on customers. This section of the report describes
recent improvements to the EAB’s behavioural monitoring process and
evaluates behavioural trends in a number of areas of BT’s operations.
The EAB and the EAO worked with BT’s Group Programme Office to
develop a ‘behavioural dashboard’ to bring together indicators
relevant to the Undertakings. The dashboard – which was approved
by the EAB – provides more detailed coverage of BT employee and
commercial behaviour than was previously available. Excerpts from
the dashboard are included in this report.
The Behavioural Dashboard consists of three categories: Drivers,
Activities and Outcomes.
Drivers
Drivers are metrics on the progress of Undertakings-related
initiatives to drive cultural and behavioural change in the company.
Code of Practice Training
100
% Actual completions
Introduction to the EAB’s Behavioural Dashboard
95
90
85
80
Managers
The Code of Practice
The Code of Practice (CoP) is produced by BT to explain the
Undertakings to BT employees. It deals with the organisational
changes resulting from the Undertakings, restrictions on the sharing
of certain information and limitations on influencing Openreach’s
and BT Wholesale’s commercial policy.
The Code of Practice was sent to all BT employees in December
2005. At the same time BT introduced an associated training
programme: ‘It Matters’. BT set self-imposed targets to achieve
training completion rates of:
UK managers
– 95% by 30 June 2006
UK Team members – 90% by 31 December 2006
Team Members
March 2006
March 2007
Source: BT
The chart above shows the percentage of training completion for
managers and team members. Completion rates have increased over
the last year, and by March 2007, had exceeded BT’s initial targets.
The EAB has recommended that BT adopts the same targets for
high risk contractors as it has achieved for employee training, even
though this is not a direct requirement of the Undertakings. BT
divides its contractors into high and low risk for the purpose of
training in the Undertakings; with roles such as software developers
and call centre staff classed as high risk and others – such as catering
and security staff – classed as low risk.
The EAB reviewed the Code of Practice and concluded that the
majority of the Code’s principles are being effectively applied. The
EAB has taken steps to ensure that all of the principles are part of its
monitoring and validation activity, and that a monitoring plan exists
for each one.
Equality of Access Board 15
Behaviour
Activities
Undertakings-related complaints to BT confidential helpline
This section of the dashboard measures the behaviour of BT
employees including the way they work and their interactions with
customers. The measures – known as ‘activities’ – are grouped to
reflect the behaviour of individual employees and patterns in
commercial behaviour.
33%
Individual behaviours
Measurements of individual behaviour include:
Peripheral vision
Peripheral vision is where call centre agents within BT Retail and BT
Global Services who deal with multiple products and systems could
use inappropriate information in an EoI product transaction. BT uses
behavioural controls to prevent downstream call centre agents
accessing inappropriate information. To measure the effectiveness of
these controls, BT produces a monthly monitoring report showing all
identified incidents of inappropriate access to information. Each
incident is followed up with re-training with the potential for
disciplinary action.
The number of incidents is both very low (considering the size of
BT’s call centre workforce) and decreasing over time. By the fourth
quarter of the year, BT Retail had recorded no cases of inappropriate
access. BT Global Services had a compliance rate of over 99%
although there were a minor number of incidents and the EAB has
encouraged this LoB to learn lessons from BT Retail to achieve a
similar outcome. As a result, BT Global Services has put in place a
behavioural change programme to drive the continued reduction in
incidents.
The number of incidents shown in the graph reflects a very small
proportion of the day-to-day transactions conducted by call centre
agents.
For more information, see Delivery section, p12.
Information sharing
Equivalence
Source: BT
Other Individual Behavioural Measures
The EAB also keeps a number of other behaviourial measures under
review, including call monitoring, mystery shopping results,
monitoring of peripheral vision for Ethernet advisers and CPs’
perceptions of their account managers’ behaviour. There were no
issues that had to be pursued as a result of these reviews.
Commercial behaviours
Measurements of commercial behaviours include:
Statement of requirements
SOR Status-cumulative data from Feb-06 to Mar-07
20
100
18
90
16
80
14
70
12
60
10
%
Modified pooled z-test score
Volume of non compliant incidents identified on CSS for broadband advisors
67%
50
8
40
6
30
4
20
2
10
0
0
04/06 05/06 06/06 07/06 08/06 09/06 10/06 11/06 12/06 01/07 02/07 03/07
BTGS
BT Retail
Pending
Rejected
Accepted
Withdrawn
BT CPs (84% of the volume)
Non-BT CPs (16% of the volume)
Source: BT
Source: BT
Confidential Employee Complaints
The EAB monitors the pattern of Statement of Requirements (SORs)
accepted or rejected by Openreach from non-BT CPs compared with
those from BT CPs. The evidence shows that a higher percentage of
non-BT CPs’ SOR requests were rejected by Openreach, although
those CPs submitted far fewer SORs. This is an area of considerable
industry interest and the EAB will undertake a thorough review of
the process during 2007.
BT introduced a confidential process for handling employee queries
and complaints regarding Undertakings issues. None of the six calls
which were received over the year as part of this process were found
to have led to a breach of the Undertakings and most concerned
information sharing rules as the graph opposite shows:
16 Equality of Access Board
Behaviour
Appointment books performance for EMP and SPG
Customer perceptions
Openreach has made the new appointment booking facility available
on two systems – Service Provider Gateway (SPG) and Equivalence
Management Platform (EMP). SPG data is not yet available, but the
availability of the EMP system for this facility has been consistently
above 99.5% over the past year.
BT conducts a number of customer satisfaction surveys. These
include separate surveys of CP customers by BT Wholesale and
Openreach:
BT Wholesale Undertakings-related customer perceptions
BTW Customer Satisfaction Survey
The EAB requested that the EAO conduct a detailed review of
Customer Business Management, focusing on the account
management choices offered to CPs and the arrangements for
placing orders for EoI products. The review also considered CPs’ views
of whether their chosen options had resulted in their being
disadvantaged in terms of pricing, service and quality.
The review found that there was inadequate communication
about account management alternatives. BT has agreed to clarify its
policies in this area. The EAO also highlighted a common concern
that the qualitative improvements expected of the new account
management relationships are not yet being delivered by Openreach.
CPs indicated that more could be done to champion fair access to
products and services and to respond to customer development
plans. This issue had been recognised by Openreach which has since
embarked on a major behavioural change programme encompassing
initiatives that seek to improve customer relationships.
Outcomes
This category of the behavioural dashboard assesses the results of
behavioural change associated with the Undertakings. Measures of
outcomes include:
Complaints received by BT
Undertakings-related complaints from CPs to BT closed in 2006-07
90
80
% Score
Customer Business Management review
70
60
50
Question A
Question B
March 2006
March 2007
QA = “How confident are you that BT Wholesale will deliver against its
commitments from the TSR?”
QB = “How, thinking more specifically about equivalence, do you believe
BT Wholesale delivers products equivalently to all its customers?”
Key
QA confidence rating between 1 (not at all confident) and 10 (completely
confident); all respondent scores are then modelled to give a score on a
1 to 100 scale index.
QB = % of respondents that answered "yes"
Source: BT
BT Wholesale customer satisfaction results show a small
improvement over the year in the belief that BT Wholesale delivers its
products equivalently and a small decrease in confidence in BT
Wholesale’s delivery of its TSR commitments.
3
8
Openreach Undertakings-related customer perceptions
Openreach Customer Satisfaction Survey
70
60
% Score
17
50
40
Spirit
Equivalence
Information sharing
Source: BT
Most of the 28 closed CP complaints received by BT were directed to
Openreach (53%) while the rest were for BT Wholesale (29%) and BT
Retail (18%). All these complaints were investigated by BT which
asserts none resulted in a breach. The majority of complaints relate
directly to the letter of the Undertakings and the degree of
equivalence achieved by BT in delivering products and services. Less
than one-third related to the spirit of the Undertakings and the
behaviour of BT’s employees.
The EAB has been informed of other concerns about the Spirit of
the Undertakings during its CP engagement programme, and these
have been shared with BT. Due to their informal nature however, they
are not captured in BT’s reporting data.
30
Question A
Question B
March 2007
QA = “How confident are you that Openreach will deliver against its
commitments from the TSR?”
QB = “... do you believe Openreach delivers products equivalently to all its
customers?”
Key
QA confidence rating between 1 (not at all confident) and 10 (completely
confident); all respondent scores are then modelled to give a score on a
1 to 100 scale index.
QB = % of respondents that answered "yes"
Source: BT
Equality of Access Board 17
Behaviour
The Openreach survey commenced during 2007, so no previous
year’s results are available for comparison. Within the year, the
numbers show an improvement in respect of Question B.
Openreach and BT Wholesale customer satisfaction surveys are
processed differently and therefore the reported outcomes are not
directly comparable. Differences include the approach to sampling
and the weighting of results by revenue. BT is working with the EAO
to provide more closely comparable data in future so that, whilst still
meeting BT’s needs, the data may also more readily assist the EAB to
discharge its monitoring responsibilities.
Openreach engineers’ behaviours
The EAB has heard concerns from some CPs regarding the behaviour
of Openreach engineers when dealing with end-customers. As a first
step in assessing trends in this area, Openreach is in discussions with
industry regarding implementing a survey on engineering behaviour
in the first half of 2007/08.
Openreach Product Customer Satisfaction Survey
The EAB was keen to see how satisfied CPs were with the EoI
products that CPs are now using. Although data by product is not
available, at an aggregate level the information shows that the time
to repair faults has the lowest level of satisfaction.
BT employee surveys
BT conducts a number of surveys to assess employee behaviour with
regards to the Undertakings. These include:
BT Regulatory Culture Survey
BT’s Regulatory Compliance team commissioned a survey of
approximately 3,000 BT employees which obtained data on
Undertakings-related perceptions. The survey’s results reported
recently to the EAB were generally positive although BT identified
some areas requiring further action.
BT CARE Survey results
BT Employee Survey
80
70
% Scored Positively
60
50
40
30
20
10
0
Question A
Question B
March 2006
March 2007
QA = “I believe that BT treats all customers, whether internal or external,
in a fair and equal manner?”
QB = “The company helps me comply with our legal and regulatory obligations?”
Source: BT
The EAB reviews detailed results from BT’s internal employee survey.
These results indicate that employees are confident that BT treats its
customers equivalently and helps employees to meet their regulatory
obligations. The results show a slight decrease year on year.
18 Equality of Access Board
It Matters
During 2006, both BT Wholesale and BT Global Services have
conducted employee surveys to measure the effectiveness of the
Code of Practice ‘It Matters’ training. The results suggest that BT
employees are developing a good understanding of the impact of the
Undertakings with supplementary support available as required.
Those not certain of their role appear prepared to seek further
clarification.
Conclusion
In summary, the outcome measures do not raise major concerns,
although they do not reflect the degree of change that might have
been hoped for. This may be because change can only be measured
effectively over a long period, and the Undertakings are still a new
way of working for many BT employees.
Ongoing improvements
The Behavioural Dashboard is a recently introduced set of measures
and will be developed further over the coming year. In January
2007, the EAB noted two issues where improvement was needed:
training delivery for high risk contractors and action to reduce
incidents of ‘peripheral vision’ by BT Global Services’ customer
service teams. It has asked BT to address these issues.
Despite the progress that BT has made in encouraging behavioural
change among employees, customer reaction remains mixed. In April
2006, Ofcom published a survey of BT’s wholesale customers which
identified a perception among some CPs that Openreach’s
management focused on “ticking the box” to comply with the letter
of the Undertakings. It also pointed to the risk that formal
compliance might take precedence over “getting things right”.
In November 2006, the Communications Management
Association (CMA) conducted a survey among members of their
perceptions of Openreach and reported the findings to the EAO.
Whilst the survey involves only a small sample of end-users, it
provides additional data on end-users’ perceptions of Openreach
delivery.
For example, nearly two-thirds of respondents offering a view
said that Openreach engineers delivered a good service on their
behalf. However, less than a fifth said access to engineering
appointments had improved. In addition, the great majority of
respondents reported that Openreach engineers act in an impartial
way “between BT and BT’s competitors”.
The EAB recognises that cultural change in an organisation as
large and complex as BT is inevitably a long process. In future, it
expects to see evidence of trends that show that BT is continuing to
make significant progress in encouraging appropriate behaviour. The
EAB will continue to monitor this indicator of the delivery of the
Undertakings.
Outlook
Looking to 2007/08
The remaining milestones are fewer in number, but larger in scale.
Milestones already successfully delivered need to be sustained through
compliant behaviours. Also, as BT’s 21st Century Network programme
develops, the challenge is to ensure that this project is delivered in a
manner that supports equivalence. This section looks at these three
areas in more detail.
Future Undertaking milestones
Ongoing compliance measures
The key milestones in the coming year are as follows:
As more Undertakings pass their milestones, the EAB will focus on
ongoing compliance. This is an important aspect in the delivery of
the Undertakings as it establishes whether BT is acting compliantly
on a consistent basis across all relevant transactions.
The EAB’s ongoing compliance monitoring is focused on three
main areas:
Wholesale Analogue Line Rental RFS
In November 2006, BT confirmed that it would not meet the
voluntary milestone of 31 December 2006 for WLR to be RFS. It was
concerned that the limited functionality of the WLR product would
lead to a deterioration in customer experience. The EAB will monitor
BT’s progress towards achieving the formal WLR RFS date of 30 June
2007. At the time of this report, the EAB believes there are some
significant risks associated with this Undertaking.
Wholesale ISDN2 and ISDN30 Line Rental RFS
BT is also required to deliver RFS for Wholesale ISDN2 Line Rental
(30 September 2007) and Wholesale ISDN30 Line Rental
(31 December 2007). The EAB will monitor the delivery of
these obligations, which it considers to be at risk.
Operational Support Systems and
Management Information Systems
Monitoring the separation of Operational Support Systems (OSS) and
Management Information Systems (MIS) will be a key focus for the
EAB in 2007/08. The implementation of system separation will make
it more straightforward for BT to demonstrate to the EAB that no
inappropriate transactions are taking place. In March 2007, Ofcom
published a consultation on a variation to the Undertakings on OSS
separation. The variation involves the introduction of a series of
binding milestones towards the full delivery of physical separation of
OSS by 2010. This variation, if confirmed, will lead to further EAB
monitoring activity in this area.
Product KPIs
Product KPIs monitor the degree to which equivalence of output is
being delivered. They can be used to indicate whether products are
being operated on an EoI basis. Work to date on IPStream has shown
that the product KPIs are easily misintrepreted. They often require
further analysis to understand whether top level service differences
are brought about by non-compliance or other factors. The EAB
expects that product KPIs will become more informative once further
data is available on the LLU and Ethernet portfolios. The EAB will also
focus on migration KPIs once the migration processes have been
agreed with Ofcom and industry.
Behavioural Measures
As each product passes its EoI milestones, the EAB will ask BT to
implement additional monitoring of the behaviour of call centre
agents and engineers to ensure that the equivalence concept is not
undermined. Now that Openreach is established and fully
operational, the EAB will put more weight on behavioural measures,
including measures relating to the handling of processes such as
‘Statement of Requirements’ to manage product development
equivalently.
Equality of Access Board 19
Outlook
Ongoing Audits
The EAB will revisit the ongoing processes and controls to ensure that
compliance with those milestones already delivered continues. The
EAB has planned a series of audits to take place during 2007/08 to
revisit most of the key Undertakings to ensure that compliance is
maintained.
The EAB plans to focus increasingly on whether a level playing field
for all CPs is delivered in practice. It will do this by looking at
situations where more than one equivalent product or system exists
and BT uses one and non-BT CPs another. This can result in different
service levels even though each solution is equivalent. This may
occur for operational reasons, for example the new EMP system and
older legacy systems may be operated in parallel for some time to
allow CPs to migrate between systems. Alternatively, offering only
one variant of a product for all types of CP may not meet market
needs. The EAB will continue to monitor the issue and will examine
instances where there appears to be no roadmap for convergence of
products used mainly by BT and products used by CPs.
Next generation networks (NGN)
The Undertakings set out broad principles regarding NGNs rather
than obligations of the kind included for other product portfolios.
During the year, the EAB has developed its understanding of BT’s
21CN programme and the compliance issues involved. It has met the
Chairman of NGNuk and BT’s 21CN Programme Director, and has also
heard the views of CPs regarding NGN roll out.
The EAO has attended the Consult 21 Steering Group and some of
its working groups as an observer. The EAB is satisfied that the
Steering Group is functioning effectively. CPs have expressed concern
to the EAB that it can be difficult to manage the large number of
updates provided by the Steering Group. BT has taken steps to
address this issue and the EAB will continue to monitor the situation.
The EAB is developing success criteria for the Undertakings
relating to NGN. It is satisfied with BT’s compliance with the
obligation to participate in an NGN industry group and an
operational adjudicator scheme. It is also satisfied with BT’s progress
towards agreeing arrangements for making compensation payments,
and the steps BT is taking to fulfil its obligations on broadband
dialtone and NGN implementation, which the EAB will continue to
monitor.
20 Equality of Access Board
The obligations regarding network access provision, design and
equivalence are more complex. They are intended to cover areas such
as ensuring network access is not foreclosed by certain design
decisions and ensuring that its pricing is based on efficient design
costs. They also ensure that network access is made available on an
EoI basis within adequate timescales to allow all CPs to compete
effectively. The EAB will continue to develop its approach in these
areas and this will become one of the key monitoring areas in
2007/08 and beyond.
BT reorganisation
On 24 April 2007, BT announced a reorganisation of its businesses
with the creation of BT Design and BT Operate. In due course, the
EAB will review the impact of these changes on BT’s approach to
ensuring compliance with the Undertakings.
About this Report
About this Report
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 independent
assurance.
This is the second EAB Annual Report and, like the first Report, it
includes a number of key opinions which are independently assured
by PricewaterhouseCoopers LLP (“PwC”). PwC also undertakes
assurance activity on key performance indicators (KPIs) and other
data in this Report and assesses whether this Report is consistent
with the EAB’s annual report to Ofcom. PwC’s independent report
and opinions are set out later in this report.
This section explains the reporting policies adopted by the EAB in
forming its opinions.
Opinion on the EAB’s governance
On page 5, the EAB reports that its governance arrangements have
been strengthened this year. In reaching this opinion the EAB
considered the following matters:
The EAB’s confidence in the completeness and accuracy of the
EAO’s compliance reports to highlight issues that are critical to the
delivery of the Undertakings and identify actual or potential
breaches.
The actions taken by the EAO and BT to address governance issues
identified in last year’s Report, particularly the commissioning and
documentation of internal validation reviews.
The performance of the EAO’s breaches and complaints processes.
The findings of the BT Internal Audit review of the EAO in autumn
2006 and of BT and Ofcom’s joint Review of the EAB following
one year of its operation.
The views of CPs 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 within BT.
The EAO’s access to information held by BT; and the adequacy of
the process for compiling the annual reports and the ability of the
EAB to have unfettered influence on the detailed content and
conclusions of the reports.
Opinion on the adequacy of resources in support of
the EAB
This report concludes that BT has continued to provide satisfactory
resourcing to enable the EAB to fulfil its remit (page 5). In reaching
this opinion the EAB has had regard to:
The timeliness and quality of monitoring reports and reviews
submitted by the EAO.
The quality of support provided by the EAB Secretariat in respect
of the EAB’s meetings and its reporting responsibilities.
The results of a board review exercise conducted in autumn 2006
in which individual EAB members were asked for their opinion on
support for the EAB.
The views of the Director EAO and the EAB Secretary on the
resources at their disposal.
The results of the independent review of the EAB by BT Internal
Audit and the joint review by BT and Ofcom in autumn 2006
referred to above.
The implications of views of CPs expressed during direct
engagement with the EAB.
Opinion on BT’s governance associated with the
Undertakings
On page 7, the EAB reports that BT’s governance arrangements
associated with the Undertakings have improved significantly in the
past year. In reaching this opinion the EAB has had regard to the
following processes to identify evidence that BT has a clear
framework for directing implementation of the Undertakings:
Effective mechanisms for ensuring complete and accurate
monitoring of implementation.
Effective measures in place to detect potential breaches and to
report and remedy actual breaches.
Adequate processes to handle complaints relating to the
Undertakings.
Effective programme of reporting to the BT Group plc Board and
relevant Board committees.
The EAB also takes account of the following information resulting
from the implementation of these processes:
The findings of the EAO’s monthly monitoring reports on BT’s
compliance with the Undertakings, including steps being taken to
deliver future commitments.
The Director EAO’s monthly report to the EAB which, inter alia,
tracks and comments on governance developments.
Quarterly reports from the Openreach CEO, on the measures
being taken to ensure and maintain compliance in his
organisation.
The views expressed by individual CPs in presentations to and
direct dialogue with the EAB.
Equality of Access Board 21
About this Report
The EAO’s quarterly reports on complaints relating to the
Undertakings, which include an assessment of developments in
BT’s complaints handling arrangements.
Experience of reporting to the EAB on breach investigations by BT
and the EAO.
The results of the EAO ‘Quick Checks’ process, where all issues
raised by CPs or internally are assessed to determine if they
require further investigation.
Milestone
Due Date
EAB Opinion
Areas in BT Exchange as a
service
22 March 2006*
Delivered on time
List of Exchange
vacations
22 March 2006*
Delivered on time
Contract Management
mechanism
22 March 2006*
Delivered on time
LLU RFS, including
IPStream using LLU
30 June 2006
Not achieved: trivial breach
of SMPF RFS.
RFS for WES, BES, WES
Backhaul
30 September 2006
Delivered on time
Level 2 of separation of
Management Information
Systems
22 October 2006
Delivered on time
WLR Analogue RFS (good
faith gesture)
31 December 2006
Not achieved though not a
breach
Undertaking is at risk i.e. there are key issues that could impact
the delivery of the Undertaking to the agreed date but these are
being managed within the programme.
IBMC for IPStream using
LLU
31 December 2006
Not achieved: non-trivial
breach
Undertaking date has been missed or is in jeopardy i.e. there are
Key unresolved issues that will impact the delivery of the
Undertaking to the agreed date.
IBMC for BT’s relevant
broadband service
31 December 2006
Delivered on time
WLR Analogue service
transfers
1 January 2007
Delivered on time
Opinions on BT’s delivery of the Undertakings during
2006/07
In the section ‘BT’s Undertakings delivery performance’, the EAB
reports its opinions on BT’s delivery of several key Undertakings
during the year. The individual opinions (summarised in the table
opposite) are determined through the EAB’s Undertakings validation
process, which is underpinned by a monthly EAO report on the status
of each relevant Undertaking. The report includes the following
status indicators:
Blue
Green
Amber
Red
Summary of the EAB’s opinions on BT’s delivery of key Undertakings
milestones reported in pages 8 to 14.
Undertaking completed, auditable evidence provided to the EAO
(or Internal Audit and Regulatory Compliance (“IARC”) acting on
its behalf) and validation successfully completed.
Undertaking delivery on track, or Undertaking completion
asserted by BT And EAO validation is underway or is awaiting
auditable evidence of achievement.
Only the EAO can move an Undertaking from Green to Blue status.
This decision is based on a validation review to determine whether BT
has completed the requirements of the Undertaking by the due date.
The EAO leads this review having previously agreed success criteria
with BT, and where appropriate having commissioned IARC to
undertake review activity on its behalf.
The EAB and BT have identified four broad categories of success
criteria – process, systems, people and product – which are applied to
all major deliverables. Each of these categories is populated and
agreed in advance for each Undertakings deliverable. Examples of
more detailed criteria under these headings include the existence of
an operating model for equivalence signed-off and in use by BT
(Product), inter-LOB trading agreements agreed and in use (Process),
evidence of training documentation and delivery (People) and
operational readiness testing (Systems).
The EAO has developed an Audit and Validation Plan (AVP). This is
designed to ensure a rigorous approach is taken to the monitoring
and reporting of all deliverables and ongoing compliance. This takes
account of any exemptions from or variations to the Undertakings.
22 Equality of Access Board
*Validated in 2006/7
Opinions on BT’s progress towards Undertakings due in
2007/08
The EAO’s monthly status report also informs the EAB’s plans for
monitoring, and perspectives on, BT’s future compliance set out in
the ‘Looking to 2007/08’ section of this Report. This section includes
the EAB’s opinion that there remain ‘some significant risks’
associated with BT’s delivery of the Wholesale Analogue Line Rental
RFS of 30 June 2007, and that the delivery of ISDN2 and ISDN30
later in 2007 is ‘at risk’.
Product KPI monitoring
The EAO monitors BT’s KPIs on products covered by the Undertakings
on a monthly basis, and reports on them to the EAB. In conducting
this review the EAO considers the accuracy of KPI data supplied by
BT, the effectiveness of BT’s mechanisms for ensuring complete and
accurate reporting of KPIs and BT’s future plans for KPI development.
BT publishes these KPIs on a quarterly basis. The EAO’s monthly
report highlights significant changes in individual indicators which
might suggest potential non-equivalence. The EAO investigates
these situations further with BT and reports findings to the EAB.
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 2007 (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 ‘About this Report’ on pages 21 to 22 (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 associated with the Undertakings;
BT’s delivery of the Undertakings during 2006/07; and
BT’s progress towards Undertakings due in 2007/08;
are fairly stated in accordance with the Reporting Policy. These
opinions are shown on pages 5 and 7 within the The Undertakings
Governance Framework, and page 19 in Looking to 2007/08 and
reproduced in bold italic text within the Reporting Policy and in
respect of BT’s delivery of the Undertakings during 2006/07
shown in the table on page 22 of the Reporting Policy with
further description given on pages 8 to 14 of the Report under
“Major Milestones” (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 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 department (“BT IARC”) 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
(the “KPIs”) for IPStream Provision and Repair, Datastream
Provision, Datastream Repair, SMPF Provisioning using EMP
shown on pages 13 and 14 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 from
the underlying management information of the Group. We
completed, in conjunction with BT IARC tests over data
generation, consolidation and reporting; and
whether, in our opinion, the numerical and graphical measures of
Code of Practice Training completion, Volume of non-compliant
incidents identified on CSS for broadband advisors, Undertakingsrelated complaints received to BT confidential hotline, Statement
of Requirements status, analysis of closed CP complaints received
by BT, BT Wholesale Customer Satisfaction Survey, Openreach
Customer Satisfaction Survey and BT Employee Survey related to
measuring behavioural change disclosed on pages 15, 16, 17 and
18 (the “Measures of Behaviour”) are properly compiled from the
underlying management information of the Group. In this regard,
we planned our procedures to provide us with reasonable
assurance they are properly compiled from the underlying
management information of the Group. We completed, in
conjunction with BT Internal Audit, tests over 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.
Our engagement includes the expression of an opinion on the
fairness of the EAB’s opinions in respect of BT’s governance measures
associated with the Undertakings, BT’s delivery of key Undertakings
milestones during 2006/07 and BT’s ongoing compliance with the
Undertakings in 2006/07. Our assurance procedures, which are
described above, focus on understanding and evaluating 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 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
Equality of Access Board 23
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.
Conclusions
In our opinion:
the EAB’s Opinions, shown in bold italic text on pages 21 and 22
of ‘About this report’ and in respect of delivery of the
Undertakings during 2006/07 shown in the table on page 22 of
‘About this report’ are fairly stated in accordance with the
Reporting Policy;
the EAB Annual Report for the year ended 31 March 2007 is
consistent with the Ofcom Report;
The KPIs on pages 13 to 14 are properly prepared in accordance
with the Reporting Policy with the exception of the “SMPF
Provisioning using EMP” KPI shown on p14 which is properly
compiled from the underlying management information of the
Group extracted from the Equivalence Management Platform
(“EMP”). Whilst all aspects of the EMP are included in the BT IARC
programme of testing from 1 April 2007 this was not complete by
the date of this report. As such we have been unable to form an
opinion on the processes and controls relevant to data generation
and consolidation within the EMP;
the Measures of Behaviour on pages 15 to 18 are properly
compiled from the underlying management information of the
Group; and
Nothing has come to our attention to indicate that the remainder
of the EAB Annual Report for the year ended 31 March 2007 is
inconsistent with the findings of our work.
PricewaterhouseCoopers LLP
Chartered Accountants
London
10 May 2007
24 Equality of Access Board
Terms used in this report
21CN
–
BT’s 21st Century Network programme
AVP
–
The EAO’s Audit and Validation Plan
BES
–
Backhaul Extension Service
BT CPs
–
BT’s downstream businesses BT Wholesale, BT Global Services and BT Retail
CCD
–
Customer Committed Date
Consult 21 –
BT’s 21st Century Network consultative group
CoP
–
Code of Practice
CPs
–
Communications Providers
DSLAM
–
Digital Subscriber Line Access Multiplexer
EAB
–
Equality of Access Board
EAO
–
Equality of Access Office
e-Co X
–
BT’s existing order and fault handling system for LLU and extension services
EMP
–
Equivalence Management Platform
EoI
–
Equivalence of Input
IBMC
–
Installed Base Migration Complete
IP VPN
–
Internet Protocol Virtual Private Network
IPR
–
Intellectual Property Rights
ISDN
–
Integrated Services Digital Network
LiSA
–
Line Share Automation
LOB
–
BT Line of Business
LLU
–
Local Loop Unbundling
MDF
–
Main Distribution Frame
MIS
–
Management Information Systems
MPF
–
Metallic Path Facility
NGN
–
Next Generation Network
NGNuk
–
Independent NGN industry body
Non-BT CPs –
Communications Providers external to BT
OSS
–
Operational Support Systems
PPC
–
Partial Private Circuit
SLA
–
Service Level Agreement
SMP
–
Significant Market Power
SMPF
–
Shared Metallic Path Facility
SPG
–
Service Provider Gateway
TSR
–
Ofcom’s strategic review of telecoms
WES
–
Wholesale Extension Service
WES B
–
Wholesale Extension Service Backhaul
WES LA
–
Wholesale Extension Service Local Access Product
WEES
–
Wholesale End-to-End Ethernet Service
WLR
–
Wholesale Line Rental
WLR3
–
The new EoI WLR product
Z-test
–
Statistical indicator of equivalence
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