News

Ofcom caps BT's Openreach prices

Regulator limits the amount that rivals can be charged for leasing the company's superfast broadband

31 Mar 2017

Ofcom will be cutting the price that BT can charge rivals for use of its Openreach fibre network in order to promote competition, it has been announced.

Specifically, Ofcom will be placing restrictions on the amount it is allowed to charge for its superfast broadband services, which have a maximum speed of 40Mb/s. The watchdog expects this to lead to cheaper prices for end-users, as well as promoting competition within the marketplace.

The company would also be compelled to complete repairs and line installations more quickly, something the company was fined by the regulator for earlier this month. If BT fails to deliver, Ofcom will have the ability to impose further fines.

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

Ofcom will not, however, be capping the company's higher-speed services. This is partly because it believes that the caps on superfast broadband (as opposed to ultrafast networks like BT's new G.Fast infrastructure) would be enough to ensure competition, but also because it believes this will incentivise rival companies to build their own fibre infrastructure to keep up with BT.

The telecoms industry has reacted positively to the news, predicting a better overall quality of service for users. "This move is recognition that superfast broadband is increasingly becoming the new normal when it comes to the speed consumers expect from their internet provider," said uSwitch's head of regulation Richard Neudegg. "This should help to reduce fears of broadband blackouts, that research shows puts some consumers off moving to better services."

Mark Collins, director of strategy and policy for CityFibre, was similarly pleased: "Ofcom is finally delivering its promise to support full fibre investment and competition that will help close the UK's embarrassing fibre gap."

"This review is a major step forward. It provides the incentives for investing in full fibre networks that compete with BT. In addition to the measures announced today, we urge Ofcom to follow through on its proposals to improve access to BT's ducts and poles, and if Ofcom gets that right it will give us the tools and incentive to continue our investment in full-fibre infrastructure across the UK, and deliver it further and faster."