BT 2009 Annual Report Download - page 20

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
BUSINESS AND FINANCIAL REVIEWS BUSINESS REVIEW
18 BT GROUP PLC ANNUAL REPORT & FORM 20-F
Market context
In spite of the current economic downturn and increasing
competition in the local access market, the use of Openreach’s
fixed-line network for the provision of broadband services
continues to grow. This growth is driven by the increasing numbers
of homes with personal computers, intense competition between
CPs driving improved and cheaper products, and the need for ever
higher bandwidth. Prior to the delivery of Openreach’s super-fast
access product, some CPs have started to compete on bandwidth
over our copper network by investing in new technologies such as
ADSL2+ and bonded copper.
We also saw growth in the Ethernet market as CPs are under
pressure to transfer large quantities of data to support the growth
of new applications. In 2009, Openreach continued to protect its
market leading position in the provision of Ethernet services by
investing in its product portfolio to provide greater flexibility and
increased bandwidth and setting more competitive prices.
Operational performance
Service performance
In 2009, Openreach made significant improvements in the quality
of service delivery of its products. The number of provision and
repair orders that did not meet target delivery dates in 2009
reduced by nearly three quarters and over a third, respectively.
There has been a more than 65% reduction in the number of
customers waiting more than three days for a fault to be fixed.
In addition to reactive provision and repair, improved service
requires investment in reinvigorating the access network
infrastructure. In 2009, Openreach invested £63m in a proactive
maintenance programme, which reduced access fault rates by more
than 20% in the year.
Openreach operates a large fleet of more than 20,000 vehicles
and is committed to finding innovative ways to minimise its
environmental impact. In addition to introducing more efficient
vehicles to the fleet and modifying racking systems to reduce
vehicle weight, we are also conducting trials of electric and other
alternative vehicle technologies. Openreach was awarded Transport
for London’s Greenfleet Private Sector Fleet of the Year Award in
2009.
Delivering on the Undertakings
During 2009, Openreach continued to deliver on its Undertakings
made to Ofcom (see Regulation,pages 26 to 27), including further
physical separation of customer records and migration of customers
over to equivalent analogue and digital wholesale line rental (WLR)
products. As we have now delivered a large proportion of the
Undertakings, the emphasis is increasingly on ongoing monitoring.
In 2009, a programme of compliance health checks was completed
and periodic reporting against KPIs was initiated.
Openreach products
Wholesale line rental
WLR enables CPs to offer telephony services with their own brand
and pricing structure over BT’s network.
At 31 March 2009, Openreach was providing 20m WLR lines to
other BT lines of business and 5.6m to other CPs. Of the lines
provided to other CPs, 4.6m were WLR analogue lines (up 21% on
2008) and 1.0m were WLR digital channels (up 19% on 2008).
Local loop unbundling
Local loop unbundling (LLU) enables CPs to use the lines
connecting BT exchanges to end users’ premises and to install their
own equipment in those exchanges.
At 31 March 2009, there were 13.8m unbundled lines in the UK
(up 9% on the previous year). Of these, 8.1m were for BT lines of
business and 5.7m were for other CPs. More than 20 CPs were
providing unbundled services and Openreach was fulfilling more
than 94,000 LLU orders a week.
Ethernet
Openreach’s Ethernet products offer CPs a wide choice of
high-bandwidth circuits to build or extend their customers’ data
networks. We made major reductions in the connection and rental
costs of services in our Ethernet portfolio with effect from
1 February 2009, which support and improve the access and
backhaul markets in the UK at lower cost and support the growth of
data-intensive applications.
Next generation access
Starting in summer 2009, Openreach will be running operational
pilots of fibre to the cabinet (FTTC) between the exchange and
customer premises. Two exchanges – one in Muswell Hill in North
London and one in Whitchurch, South Glamorgan – will conduct
FTTC pilots involving up to 15,000 customer premises in each area.
End users should experience headline speeds of up to 40Mb.
We plan to make fibre available to 1m homes and businesses
throughout the UK early in the 2010 calendar year. Parts of Belfast,
Cardiff, Edinburgh, Glasgow, London and Greater Manchester will
be involved in the initial deployment, as well as two rural locations
– Calder Valley (near Halifax) and Taffs Well (near Cardiff).
Openreach will deploy the technology, but CPs will develop and sell
services based on it.
We already provide Ethernet-based fibre to the premises of more
than 130,000 businesses in the UK. Since August 2008, as part of
an initial trial, Openreach has been deploying fibre to the premises
(FTTP) on a new 1,000 acre greenfield site at Ebbsfleet Valley in
Kent. At this site, Openreach is offering the communications
industry a wholesale fibre-based broadband product, facilitating
competition at a retail level. The service can support speeds of up
to 100Mb – the fastest headline speed available to residential
customers in the UK.
£1.5bn
planned investment in super-fast broadband
BUSINESS AND FINANCIAL REVIEWS