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. ®