Ofcom to cut wholesale broadband prices

The UK’s Ofcom has today proposed measures to cut wholesale prices on fibre broadband products by 40% to encourage more investment and competition in full-fibre networks.

“We are proposing to maintain our policy of pricing flexibility for Openreach’s fastest broadband products, including those based on BT’s own network investments in full-fibre and its new G.Fast technology,” an Openreach statement said.

“We plan to protect broadband customers and promote competition, by cutting the wholesale price that Openreach – the part of BT responsible for its network – can charge telecoms companies for its popular superfast broadband service, which has a download speed of up to 40Mbps.”

The proposed price caps would see the annual charge of a 40Mbps download speed, and 10Mbps upload speed package go from £88.80 from today to £66.28 in 2018/19, 57 in 2019/20, and £52.77 in 2020/21.

Ofcom expects these savings to be passed on to residential customers through cheaper prices, promoting competition in the superfast broadband service most used today by consumers, while companies construct their own full-fibre ultrafast networks to compete with Openreach.

Ofcom is not proposing to cap Openreach’s wholesale charges for its higher-speed packages, including its planned new G.Fast network. This is because the watchdog expects the cap on the 40/10Mbps package will be sufficient to protect competition and protect consumers from higher prices.

The regulator is also incentivising BT’s rivals to invest in their own ultrafast networks for the longer term. The new rules proposed would also include stricter requirements on Openreach to repair faults and install new broadband lines more quickly. These new requirements would need to be met in full by 2020/21. 

Jonathan Oxley, Ofcom’s competition group director, said: “Our plans are designed to encourage long-term investment in future ultrafast, full-fibre networks, while promoting competition and protecting consumers from high prices.

“People need reliable phone and broadband services more than ever. We’re making sure the market is delivering the best possible services for homes and business across the UK."

These measures form part of Ofcom’s Wholesale Local Access Market Review for the period from April 2018 to March 2021. The consultations close on 9 June 2017, and Ofcom expects to publish its final decisions in early 2018, with new rules taking effect on 1 April 2018.

As part of this market review, Ofcom will also consult soon on detailed plans to open up BT’s network of telegraph poles and underground tunnels to competitors. This should further promote competitive investment in full-fibre, ultrafast networks.

To read the full Ofcom announcement, please CLICK HERE.