Is it Openreach or overreach?

March 2, 2016

This week’s report by industry regulator Ofcom concludes that BT will retain control over the Openreach operation, but with changes to permit more competition. We examine the arguments for complete spin off of Openreach

This is a more modest proposal than that offered by a cross-party parliamentary group which was very much in favour of splitting off Openreach to counteract what it described as BT’s monopolistic features.

In the analysis by Paul Hinks published in LWD recently., Paul concluded that if Openreach is split off from BT, and starts to either compete with rivals, or offer technologies that align with specific customer/partner needs, then really we may just have new different challenges around agreed technology standards and regulation.

BT agreed, but I found its response unconvincing. It repeated the message of the necessity for the business to have the backing of its own its powerful resources. There is something rather chilling in its protectionist tone

A Personal View

Paul sets out the strategic issues, but I would like to offer a more personal view. The BT model reminds me of the Network Rail situation. Ideologically appealing as a way of improving the sluggishness of the predecessor, the nationalized British Rail. Rail users remain unimpressed by the new system with its complex regulatory mechanisms and lack of adequate coherence ‘joined upness’ of to help customers make valuable choices.

Living with Dynosaurs

My personal experiences of both dinosaurs have mostly been frustrating. A few years ago I was locked into an apparently irresolvable four party struggle between myself, Openreach, my ISP and BT to reconnect me to the Internet. By far the most customer friendly was the ISP. I was left with the distinct impression that Open Reach would be better able to deal with me if I switched to BT and its then developing broadband system.

It took six weeks to sort it out.

Discussions on twitter (thanks to access from my local library) revealed that I was far from alone in my dissatisfaction in particular with BT itself.

It may or may not be relevant to conflate this experience with my sense that the BT huge venture to inject competition into televised sport is not resulting in a better consumer service.

I await change, bur remain less than optimistic about the leadership of BT in the vital challenges of achieving a Great Leap Forward in the necessary information highways of Great Britain.

Is it Overreach with Openreach?

Regular LWD contributor Susan Moger, Senior Fellow in Leadership,at the Alliance Manchester Business School, suggests that Openreach may risk Overreach. She notes:

What strikes me is that in managing all these ‘moving parts’ BT is struggling to cope with the changing nature of its customer base and that of a modern organisation, which BT’s Openreach is.

A good Quality high speed broadband service is a MUST for everyone now, not a luxury. In its advertising, BT has raised its customers’ expectations enormously, and is now struggling to meet them, for whatever reason.
There also appears to be an intention to manage the Openreach business in the same manner as the ‘BT in the days of copper’ ie as a command and control organisation, and this may not be appropriate.

Openreach may be a separate organisation. However, given the massive investment made BT in sports broadcasting. there is still a possibility that BT is hoping that there might be a ‘contribution’ from Openreach at some stage. In any event, underperformance and overtly bad performance by Openreach can’t help the BT brand.

Meanwhile, Ofcom’s new director Sharon White signals that BT is still under scrutiny, although there are voices suggesting the proposals need to be clearer with more specific and measurable outcomes.


Does it Take a Dictator to Make Trains Run on Time? The Case of Network Rail

March 10, 2008

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Network Rail has been given a record fine for its poor operational record over the New Year. It accepts it must improve, and says it has installed military style leadership. Which raises the old question: ‘does it take a dictator to make the trains run on time?’

O.K., here’s a confession. Network Rail doesn’t actually run trains. It looks after the tracks, and gets blamed when the trains fail to run on time, and that’s the tenuous link with the old myth about trains needing dictators to be run on time.

The current case came to a head with the news story that Network Rail

[Network Rail] has a month to haul the upgrade of its busiest line back on track after regulators imposed a record £14m fine and a package of measures to tackle the infrastructure company’s lacklustre planning procedures.
The Office of Rail Regulation yesterday gave Network Rail until March 31 to agree with passenger and freight train operators a new plan for the £8.12bn upgrade of the London-Glasgow West Coast Main Line. The project is due to allow substantial reductions in journey times and more frequent services from December this year but is more than 300 hours of work behind schedule.

According to the BBC

Network Rail’s chief executive Ian Coucher said his company had now put “military-style” command posts in place, and he pledged that the delays suffered by passengers over the New Year would not be repeated.

Let’s say I’m a bit sceptical. About Dictators making the trains run on time. About Network Rail’s changed operating procedures.

The Background

Network Rail came into existence as an emergency measure when in an earlier incarnation, Railtrack, failed to meet its charter. Railtrack was itself part of one of the last efforts to introduce competitiveness into Britain’s public sector transport systems. The plan always had a clunky feel to it. The vision of effectiveness through liberation of free market entrepreneurial behaviours through competition proved too much to achieve.

Competition between the new companies owning trains was always marginal, outside a few fingers of land in commuter territories. No way was found to breathe competition into the operation of the track, which is where Railtrack, and subsequently Network Rail came in.

The Government’s Dilemma

The dilemma for the Government was pointed out by commentators such as Management Today.

Network Rail is, to all intents and purposes, a nationalised company (although the government doesn’t technically class it as such, or it would have to take its enormous debts onto the public balance sheet). It’s not run for profit, and it doesn’t have any shareholders. So where exactly is this £14m – a record fine for a rail company – going to come from?

The only possible answer is that either the government hands over £14m of taxpayers’ money to pay the fine (which would basically amount to robbing Peter to pay Paul), or the money is taken from the pot that Network Rail is using to upgrade the railways. And as punishments go, this seems a bit self-defeating – how is it going to do an under-invested rail network any good if the Chancellor confiscates £14m from the network operator for the Treasury coffers?

The Mussolini Myth

So might a dictatorial approach be worth considering? Would the trains then run on time? That may be in the nature of an cultural myth. It arose around the Italian dictator Mussolini. The history-debunking site Snapes will have none of it.

Turns out that there were efforts to improve Italy’s ramshackle railway companies in the 1920s, before Il Duce came to power. Mussolini claimed two things. One that the trains now ran one time. And two, that he had achieved the changes through his leadership. Neither claim seems to survive more careful scrutiny.

So when Network Rail claims to have improved by introducing more military discipline into its operations, we might be wise to exercise some caution about promises and premises.

You don’t need a dictator

A related case illustrates that you don’t need a dictator to run a rail business well. The business is National Express. The rather non-dictatorial leader is Richard Bowker. The story requires a post of its own.

National Express runs the C2C, Gatwick Express and One Rail franchises, bus businesses in Birmingham, London and Dundee, and long distance coaches across the UK. Richard Bowker has been hailed as an effective leader of a complex business.

Bowker, the one-time government rail enforcer, is a graduate of the Sir Richard Branson school of management, his natural style being casual clothes and an easy-going manner. Last Thursday he unveiled an impressive set of full-year results, the first he can claim as all his own work

Reporter David Parsley noted the difference in style in the former rail regulator.

Bowker is a changed man. He’s friendly, open and makes a great deal more sense than he ever did working for the Government. It’s like someone has taken his brain off a Whitehall shelf and put it back in.

Situational leadership? Maybe, but it is clearly counter-evidence to the simplistic proposition that you need a dictator to make the trains run on time.