Ofcom pressuring BT to slash wholesale prices for superfast broadband

Charges for 40Mbps packages to be cut by 40 per cent

By Kat Hall

Posted in Policy, 31st March 2017 11:24 GMT

Ofcom could force BT's Openreach to slash the prices it charges rivals for access to its superfast broadband network under plans that could shave millions off consumer bills.

With proposals published by the watchdog today intended to encourage "full-fibre" investment, Ofcom said it wants to cut the wholesale price that Openreach – the part of BT responsible for its network – can charge telcos for its popular superfast broadband service, which has a download speed of up to 40Mbps.

By doing so it "wants to protect broadband customers and promote competition".

Openreach charges rivals £88.80 a year in wholesale charges for each individual superfast package, but by 20/21 Ofcom wants that to fall to £52.77 a year. "We would expect much of this reduction to be passed through by retail providers to their customers, resulting in lower bills," it said.

Earlier this week Ofcom whacked the former state monopoly with a £42m penalty for its failure via Openreach to compensate other providers for delays to fixing leased line "Ethernet" services.

As a result of the investigation, BT said it estimates it will pay an additional £300m in compensation to the affected communications providers.

The new rules would also include stricter requirements on Openreach to repair faults and install new broadband lines more quickly.

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."

BT finally agreed to a voluntary legal separation of its broadband division Openreach this month after Ofcom identified serious market failings in the previous structure.

As such, more than 30,000 engineers will be transferred over to Openreach, all BT's branding will be removed from the unit and it will be governed by an independent board.

However, BT will still formally own the Openreach network assets and the body's budget will ultimately be determined by BT, along with all Openreach profits flowing back to the BT Group. ®

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