TELECOMS watchdog Ofcom is curbing prices on one of Openreach’s most popular broadband lines to encourage investment in superfast broadband.
It is cutting the whole price that BT’s infrastructure arms can charge rivals such as Sky and Talk Talk for lines with a download speed of 40 megabytes per second (Mbps) and an upload speed of 10Mbps. Prices will fall from the current £88.80 per year to £52.77 per year by 2020/21.
Ofcom said it expected companies to pass the costs savings on to customers through lower bills.
Jonathan Oxley, its 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.”
Openreach will maintain full control over the prices for lines with an even faster speed in the hope it will spur telecoms firms towards installing their own superfast lines to rival BT.
The price controls come as part of a package of new rules demanding Openreach fixes faults and rolls out broadband lines at a quicker pace. As part of the measures, it will be expected to improve the level of fault repairs completed within one to two working days from 80 per cent to 93 per cent. Ofcom also wants 97 per cent of repairs to be completed within six to seven working days.
BT was hit with a record £42 million fine by Ofcom on Monday and is facing compensation costs to rivals of £300m over delayed high-speed cable installations.
However, Openreach questioned whether the price controls would lead to fresh investment in superfast broadband.
“The UK needs a regulatory framework that encourages investment and rewards risk,” said a spokesman. “Building digital infrastructure is very expensive with long payback periods and we won’t recover our more than £3bn investment in fibre until after this charge control period.
“We want to invest in more ‘full fibre’ infrastructure, and we’ll be consulting with our CP customers to develop new business models and support to achieve that.
“We support the ambition of higher service targets and we want to work closely with the rest of the industry to make sure these are the right measures and that they’re achievable.”
Talk Talk chief executive Dido Harding said the price cuts were welcome, but consumers will be left frustrated that they have to wait a year before they can benefit from lower bills.
She said: “Ofcom’s decision to only regulate some products also risks entrenching a speed divide, with customers having to make a false choice between fair prices or higher speeds.
“Ensuring consumers enjoy low prices on all superfast products is the best way to maximise take-up and encourage investment in the pure fibre infrastructure of the future.”
Dan Howdle, an analyst at broadband advice site Cable.co.uk, added: “By placing no such cap on prices charged for ultrafast (variously defined as speeds exceeding 100, 300 or 1000 megabits per second, depending on who you ask), investment in these faster technologies will be positively encouraged.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here