Openreach Industry Consultation – How we propose to exit the 103 priority exchanges by 2030 – Response

On 28 December 2023, Openreach published its initial reponse to the industry consultation on the Exchange Exit Programme.priority exchanges.

The Executive Summary highlighted a number of changes/clarifications which are summarised below:

“.Pilot exchanges moved into the main exchange exit programme
• In November 2023 driven by CP feedback to reduce the impact of the pilots on limited CP resources, Openreach announced changes to the scope of the existing pilot, reducing the number of pilot exchanges from 5 to 3. This means that 2 of the former pilot exchanges, Carrickfergus and Glengormley, will now be included in the first phase of the priority closures, bringing the total number of exchanges in the priority Exchange Exit programme to 105.
Please see briefing GEN071/23 (openreach.co.uk)for additional detail.

Start date of the 2030 programme
• In response to feedback from multiple CPs, Openreach will delay the start of phase 1 by 3 months to allow CPs to receive our initial consultation response before the 4-year closure programme starts. We therefore plan to move formal notification of the start of phase 1 exits, which includes stop sell notification, from December 2023 to 1st April 2024.

Phasing
• Industry feedback was supportive of a phased approach to exit, with many different views of how phasing could be structured. However, there was no consensus on an alternative set of phasing to that proposed in the consultation.
The proposed phasing approach will now be implemented, but with a few minor changes.

• Openreach believes that for the exchange exit programme, using an adaptable ‘learning by doing’ iterative approach and executing phase by phase is the best way to achieve our goals. It will allow Openreach and CPs to collectively apply our knowledge and skills over time using on-the-ground experience. Fine-tuning the process as we progress phase by phase will enable us to exit exchanges as
efficiently as possible for all those involved.

• In addition to delaying the start of the programme to 1st April 2024, Openreach also plans to delay the start and end of each subsequent phase by 3 months.

• The only exception will be for phase 4, where the product withdrawal date will remain as December 2030 to ensure we meet the required exit timescales, therefore shortening the phase 4 closure programme to 3 years and 9 months.

Commercials & Principles
• CPs were broadly supportive of exiting the 103 (now 105) exchanges to facilitate the adoption of a modern fibre infrastructure. CPs were also supportive of the commercial incentives proposed in the consultation. However, CPs expressed a need for commercial support that extended beyond the proposals presented. Openreach recognises CP requests for additional commercial support and is currently assessing where further support can be provided, including exploring ways to enhance our support for CPs on project management and how further incentives may be linked to a commitment to exit exchanges within agreed timescales, while remaining affordable for Openreach. This will be covered in part 2 of the consultation response in March 2024. Openreach also intends to discuss bilaterally with CPs leading up to this response.

OHP provided Ethernet Local Access (LA) pricing to be made available.
• In our June consultation, we proposed to offer LA pricing for new provision at enduring exchanges, starting with Phase One only exchanges. CPs requested that Openreach make LA pricing available for ‘new circuit installs’ ahead of stop sell notifications for all phases from the start of the programme. CPs want to remove barriers to placing new demand in the enduring locations (rather than
placing orders at the exit sites) and therefore avoid growing the number of circuits we will collectively need to migrate at closing exchanges.

• Openreach has listened to CPs’ feedback and in anticipation of CPs support for the exchange exit programme we are pleased to confirm that Openreach intends to pull forward the LA pricing offer (where applicable), i.e. with no Main Link charges, for all EAD product variants and Dark Fibre Access (DFA1AL) new provide orders provided to an access location within the closing.exchange coverage area which is terminated at the new parent exchange. This pricing is already in place at Carrickfergus and Glengormley and we plan to extend and introduce LA Pricing (subject to governance) at the designated OHP exchange (receive site) for 97 more of the 105 from the 1st of April 2024. Please see annex for exchanges.

• For these 97 exchanges we will issue a 12-month notification by 1st of April 2024 of leased line stop sell, which means that from 1st April 2025 new orders must be placed from the designated OHP exchange (receive site), where they will be charged (where applicable) at LA pricing, or from another exchange. The LAD file will be adjusted such that no new orders can be served from these 97 closing
exchanges.

• The remaining six exchanges temporarily excluded from this offer require additional fibre capacity and/or space and power in order to meet the current levels of Ethernet demand. Openreach has plans underway to address these dependencies and will endeavour to provide the same capability and pricing at these additional exchanges.

Build and Coverage
CPs were concerned that coverage not-spots would be left in exchanges and that no Openreach solution would be available to migrate customers. Openreach has undertaken build across the UK and plans to extend FTTP and SOGEA coverage as deeply as practically and commercially viable within the priority exchange areas. This commitment aims to minimise the number of premises where there is no Openreach FTTP or SOGEA access, and to help ensure we have a migration path for all existing customers. As FTTP build continues over the coming years, Openreach will proactively inform CPs of the evolving availability.

CPs’ own investments in deploying their network
• A small number of CPs said that they were concerned about investment they had made with alternative network providers and their own PIA network investments that terminate in the closing exchanges and how this would be negatively impacted by the exit programme. Openreach will continue to discuss with impacted CPs on a case-by-case basis to support with alternative options.

• Openreach has been engaging with industry on exchange exit since publishing a consultation on this topic in December 2020, and in February 2021 we notified CPs of the list of enduring exchanges (i.e. exchanges we planned to keep). If CPs continue to build their networks to exchanges that are not on the list of enduring sites, they do so at their own risk. Openreach expects CPs to have taken steps to minimise the negative impact on their networks where Openreach has publicised its exchange closure plans.

Commitment to voluntary stop sell of copper
• We expect the majority of exit exchanges to meet the 75% ultrafast coverage threshold which triggers regulatory FTTP stop sell. For premises not covered by regulatory stop sell, we proposed a voluntary stop sell. CPs were supportive of the need to stop selling copper services in exit exchanges but raised concerns over the voluntary approach if not all CPs committed to this. CPs also suggested that where Fl IP and SOGEA were available there should be customer choice to which product can be ordered.

• Openreach intends to implement a voluntary exchange exit copper stop sell rule, such that where premises have access to FTTP they will only be able to take an FTTP service, and where they do not have access to FTTP but have access to SOGEA, they will only be able to take SOGEA. The ability to order new Metallic Path Facility (MPF), SOGEA or SOTAP lines, add broadband to an existing MPF or SOTAP line, change bandwidth on SOGEA or an FI IC service supported by an MPF line or change CP and continue to use the MPF or SOTAP line will be managed by an exceptions process.

• These stop sell rules mirror the regulatory stop sell rules. We continue to be committed to an FTTP-first strategy wherever possible. We are considering the concern raised by some CPs that not all CPs may commit to voluntary stop sell. We agree that a stop sell approach, in which some CPs sign up and some do not, will not work; it will not achieve the objective of exchange exit, and it will not be
fair to all CPs. Instead, we need an industry solution where all CPs sign up to a stop sell approach and benefit from the commercial support offered by Openreach. We will discuss this with CPs in Q4 and update in our further response in March 2024.

Protecting vulnerable end customers
• In the December 2023 DSIT charter CPs made commitments regarding how vulnerable and Telecare users are migrated. Openreach and other network providers will also engage with DSIT in January 2024 on their own complementary charter. We will assess the impact of these commitments on the exchange programme, including the exit phases, and if any changes are required, we will include these in our March 2024 consultation response. • Openreach will continue to work with industry and other stakeholders to find solutions for vulnerable end customers within our strategic portfolio. It is the responsibility of CPs to identify vulnerable end customers and the devices that are connected and to work with their customers and Telecare providers to ensure they remain connected. We are committed to ensuring that our provisioning process addresses the needs of vulnerable end customers including those who have a Telecare device. Openreach plans to trial its Prove IP Telecare service as early as possible in 2024.

Migration of Critical National Infrastructure (CNI)
• Openreach acknowledges that CPs have a small portion of business/enterprise customers with complex operational settings, such as some uninhabitable premises or Critical National Infrastructure (CNI) facilities. These customers may necessitate additional migration procedures beyond the general product migration routes. We are utilising the pilot exchange programme to gather knowledge and comprehend the current user scenarios, migration pathways through the access portfolio and where there may be the need for additional support. Openreach is committed to working alongside CPs on complex uninhabitable and CNI migrations.

Plan beyond the priority exchanges exit by 2030
• CPs were keen to understand plans for exchanges beyond the priority exit exchanges and proposed that the same support and commercials should apply. Openreach understands that CPs are interested in learning more about Open reach’s long-term strategy for exchange closures beyond 2030. We consider that it is too early to set out detailed plans for future exchange closures and our focus for now is on the priority 105 exchanges. By the 2030s the network architecture, broadband market and levels of customer take up of I-I IP
and SOGEA are likely to be very different to today, hence Openreach anticipates that some aspects of our approach to exiting exchanges will evolve. However, since we started our NGA programme in 2010, we have remained committed to using c.1,000 ‘enduring’ OHP exchanges in the long-term and recommend that CPs plan their network evolution around the enduring exchanges.”

The full document can be downloaded from here.