Openreach slashes cost of shared access

10 October 2011 | Guy Matthews


Openreach, the broadband deployment arm of UK incumbent BT, has cut by at least half the access price it charges other service providers for use of duct and pole infrastructure.

BT said it is abandoning a strategy of charging a flat rate of £1.16 per metre in favour of a fee to be determined by the number of cables a duct can carry. This could result in pricing as low as 44 pence per metre, it said.

BT has been criticised in the past by rivals such as Virgin Media and TalkTalk over the level of its infrastructure charges to third parties, and has been accused of inhibiting investment in and deployment of high-speed broadband networks. BT claimed that under the new pricing model, it will be charging 38% less than the European average.

"These prices will hopefully unlock some much needed investment from others but we will have to wait and see," said Openreach CEO Liv Garfield. "Openreach has largely bankrolled Broadband Britain by getting fibre to more than five million homes, but it's time for others to help us with the heavy lifting."

Meanwhile the UK appeared to be a step closer to commercial 4G deployment following the start of LTE trials by BT Wholesale in partnership with EverythingEverywhere. BT Wholesale has said that LTE, working in tandem with fixed network infrastructure, might prove to be the answer to extending fast broadband to the 10% of the country it believes will be uneconomic to reach with direct fibre access.

In a possible brake to the commercial launch of LTE, regulator Ofcom has said its plan to auction 4G spectrum might now be delayed to the second quarter of 2012 following legal challenges from telcos over rules on the refarming of spectrum.

“It is not surprising that Ofcom has delayed the spectrum auctions to ensure that it has more time for proper consultation about the process for awarding the spectrum allocations,” commented James Walsh, senior associate at law firm Eversheds.

“Ofcom has rightly pointed out that its decisions ‘are likely to shape the future of the mobile sector in the UK for the next decade or more’, and has received serious allegations that its proposals for the auction process constitute unlawful state aid for smaller operators, amongst other things. However, the delay is disappointing given that the same spectrum ranges have already been auctioned in many countries elsewhere in Europe.”

The ultimate effect of the delay, said Walsh, is that consumers will have to wait longer for super-fast data speeds promised by 4G, and operators are likely to focus on more investment in faster 3G technologies like HSPA+ until the auctions are finalised: “Potential new entrants to the wireless market in the UK may well be dissuaded by Ofcom’s decision to delay the auction, which will give existing operators more time to increase speeds and coverage using their existing spectrum allocations before the new spectrum becomes available to others.”