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BT shifts network, blame to fourth party

Outsourcing the outsourced

BT is planning to consolidate maintenance contracts on its outsourced local networks, the copper in the ground, to Carillion and Telent in a £1bn cost-cutting measure.

The deal, currently at the letter-of-intent stage, involves putting all the maintenance and extension of BT's local-loop business under one contract in the hope of reducing costs - buying in bulk to get a cheaper rate.

The copper (or aluminium if you're really unlucky) lines in the ground used to be managed by BT, but Ofcom insisted that a separate entity was established to allow competitors to buy access. That company became BT Openreach, which maintains the copper and provides access for companies selling telephony and/or broadband, including BT, at a rate set by Ofcom.

Openreach quickly identified that maintaining the lines was the boring part of the equation and outsourced it to a variety of contractors, who are now up against the wall as Carillion and Telent get a single contract covering the whole business.

The amount that Ofcom lets Openreach charge went up by 5.7 per cent in May this year - less than was expected and, according to Openreach, an amount that left it losing money on every connection. Awarding the contracts to a single company is intended to reduce costs, though it will be another three months or so before any such contract can be signed. ®

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