Ofcom proposes price reduction for Openreach’s 40Mbps/10Mbps wholesale tariff

3 Apr 2017

British telecoms regulator Ofcom has announced measures which it says are ‘designed to promote investment in new fibre networks and ensure that customers are protected from higher prices’. Under the new proposals, Ofcom has said it will look to maintain its policy of pricing flexibility for the fastest broadband products offered by BT’s network arm, Openreach, though it will mandate a reduction in the price that it can charge alternative operators for its 40Mbps/10Mbps download/upload wholesale offering. The telco currently charges GBP88.8 (USD111.5) per annum for the tariff in question, but under Ofcom’s plans this would initially be reduced to GBP66.3 in 2018/19, before further cuts, to GBP57.0 in 2019/20 and GBP52.8 the year after. According to the regulator, it expects much of the reductions to be passed through by retail providers to their customers, resulting in lower bills. Ofcom is not, however, proposing to cap Openreach’s wholesale charges for its higher-speed packages, including those offered via G.Fast technology, with it saying it expects the cap on the 40Mbps/10Mbps package to be ‘sufficient to protect competition and protect consumers from higher prices’.

Alongside this, Ofcom has said it will implement tougher quality of service standards for broadband and phone customers, with strict rules on Openreach repairs and installations. Where faults fall on Openreach to fix, Ofcom has proposed that it will be required to: complete 93% of repairs within one to two working days of being notified, compared with 80% today; complete 97% of repairs no later than six or seven working days; provide an appointment for 90% of new line installations within ten working days of being notified, compared to 80% within twelve days currently; and install 95% of connections on the date agreed between Openreach and the telecoms provider, up from 90%. These new requirements will reportedly need to be met in full by 2020/21, while transitional targets have also been proposed to ensure progressive improvements in service before that date.

The new measures form part of Ofcom’s Wholesale Local Access Market Review for the period from April 2018 to March 2021; consultations on the matter will close on 9 June 2017. Subsequently, Ofcom expects to publish its final decisions early next year, with the new rules taking effect on 1 April 2018. Commenting on these latest proposals, 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.’

United Kingdom, BT Group (incl. Openreach), Ofcom, Openreach