The Business Interview: Openreach chief Clive Selley

Selley rejects the suggestion that Openreach and regulator Ofcom are on bad terms
Selley rejects the suggestion that Openreach and regulator Ofcom are on bad terms
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The road running through the remote hamlet of Altnaharra in Sutherland is believed originally to have been used by crofters to take their livestock to market.

But the tiny community is now home to a far faster and wider-reaching thoroughfare, namely full-fibre cables providing about 60 households and businesses with some of the fastest broadband speeds in Scotland.

The pilot project saw digital network business Openreach team up with locals, who helped to dig in the cable to enable the ultrafast connection.

Openreach, which is owned by BT Group but independently governed, is responsible for what’s known as the final mile of the UK access network comprising the copper wires and fibre connecting homes and businesses to local telephone exchanges.

And it said Altnaharra residents previously had to make do with some of the slowest connections north of the Border due to the high costs involved in serving such areas.

Paying a visit earlier this year to beneficiaries of the upgrade was Openreach chief executive Clive Selley, who covered a personal record of 500 miles in a day as he travelled through the Highlands.

He recounts talking to staff at the Altnaharra Hotel. “It was very clear that this is a game-changer for them and through that lens you could just see how important great broadband is to the economy of the Highlands.

“And I think more generally, great broadband has the potential to unlock real productivity gains for the Scottish economy, for the UK economy as a whole. It is very important as an infrastructure.”

Such drive sits against the backdrop of the Scottish Government targeting superfast broadband access to 100 per cent of premises north of the Border by 2021 under the R100 programme.

“Improvements to our digital infrastructure are essential if Scotland is to be in the forefront of the digital age,” says the Scottish Government.

Yet the rollout of such connectivity to rural Scottish communities has seen criticism over delays, and although Selley cites data finding that Scotland has superfast coverage exceeding 92 per cent, a survey published by Which? in the summer found that Orkney, followed by Shetland and Highland, ranked bottom of a table of UK local authority areas by broadband speeds.

Altnaharra was used to experiment with new deployment techniques for Fibre to the Premises (FTTP), a pure fibre connection that Openreach aims to see reach two million homes and businesses by the end of 2020, citing communications industry support for a large-scale, UK-wide network of this type.

And Selley highlights the success of the community fibre partnership model used in Altnaharra, one of about 30 such tie-ups around Scotland.

“It changes business prospects and it changes lives for the people there because they can genuinely participate in the digital economy.”

Selley also points to the UK seeing more of its GDP traded online than any other country in the G20. “What we need is for the Highlands to be fully part of that digital economy,” he continues.

That said, he does admit that the region is very challenging to serve economically, with improving connectivity not a case of going from expensive to cheap, but rather from expensive to less so.

“But we have to crack it. That’s our job and that’s what we’re very focused on.”

Internet access has moved rapidly from being seen as a futuristic luxury to becoming a standard expectation as almost every aspect of life moves increasingly online.

Data from UK communications regulator Ofcom reveals that total household internet take-up reached 88 per cent in the first quarter of 2017, from 86 per cent 12 months previously, while the number of superfast broadband connections reached 10.8 million at the end of 2016 from 9.2 million at 31 December, 2015.

Openreach, a wholesaler serving businesses like Sky and TalkTalk, launched in 2006 after a strategic review of the telecoms market by Ofcom, which focuses on promoting competition.

But the relationship between the two has not always exactly been cordial. Ofcom a year ago ordered the legal separation of Openreach from BT, saying the latter failed to take steps to address competition concerns, although the regulator later stated that such measures were in hand.

Furthermore, Ofcom in March of this year announced that it was fining BT a record £42 million for a “serious breach” of its rules for failing to pay full compensation to rival firms for late connections to its infrastructure. A further £300,000 penalty was also ordered for failing to provide information to Ofcom.

Selley, however, is adamant that its dealings with the watchdog are amicable. “I’m often challenged with the assertion that we have a bad relationship with the regulator – I don’t think we do at all,” he asserts. “Ofcom wants us to deliver great telecommunication services to the people of the UK and that’s exactly what I want to do… We don’t agree on absolutely everything, but I think we are operating very much to an agenda that they would recognise.”

He also puts a positive spin on rivals nipping at Openreach’s heels, with wholesale fibre network infrastructure provider CityFibre recently agreeing a deal with telecoms giant Vodafone to bring ultrafast broadband to up to 5 million UK homes by 2025, for example.

CityFibre has in fact been a vocal critic of Openreach, saying the latter “will never be impartial while it remains owned and funded by BT” and calling for it to “redirect its resources and work to help us build the independent, full-fibre networks of the future”.

But in Selley’s view, competition is good. “I think it’s a healthy thing, I think it’s good for the country and I think it’s good for Openreach.

“It means that we have to innovate to stay in a leadership position and it’s good for consumers and businesses across the country. I am confident that we will develop world-class techniques for FTTP delivery, and very importantly we will apply them at scale. We’re not here to cherry-pick a few deployment locations that are economically attractive – we’re here to build a big footprint, which is why, of course, we were out there in the Highlands.”

Selley’s appointment to lead Openreach was revealed at the start of 2016, and continues his lengthy career across various parts of the group, including spells in India and the US east coast, and roles including BT’s chief information officer.

He originally joined the telecoms giant as a school leaver, with the firm sponsoring him through a degree in engineering, a field he sees as appealing because “it doesn’t stand still… In 17 years we’re on our third iteration of broadband technology, so the idea that you build a career in an area that changes fast means that it’s exciting, it never gets boring – and the challenges change year to year”.

Openreach can certainly not be accused of having its challenges to seek, with residents of a rural Devon village earlier this month burning a giant effigy of one of the firm’s vans in protest at slow broadband speeds, for example.

But despite such ill feeling, Selley believes the biggest hurdle he faces is “aligning a very large workforce behind our strategic objectives of better service, broader coverage and faster speeds.

“We have 30,000 very capable people in Openreach and the more effectively I can align them behind the three strategic objectives, the greater will be the positive impact for the nation in terms of upping the rate at which we improve service and deliver those new broadband platforms.”

He points to Openreach, which in its second quarter to 30 September saw revenues remain broadly flat year on year at £1.3 billion and core earnings fall by £6m to £624m, having boosted service levels and average broadband speeds north of the Border as well as reducing faults.

Such progress follows investment, with its Scottish workforce, which now numbers just over 3,000, having grown by 300 over the last year.

“Next we will hire more again, because the FTTP programme will expand in Scotland,” he adds, with Edinburgh an early target as the move from superfast to ultrafast continues. “I think we can be absolutely awesome if we get fully aligned – and that’s exactly what I intend to deliver on.”