Listen to this article
Ofcom has proposed introducing charge controls on wholesale fibre products for the first time as it pushes Openreach to tune more of its investment toward newer, faster networks.
The regulator said that pricing flexibility would be maintained on ultrafast and full-fibre networks but that the wholesale cost to companies including TalkTalk and Sky for a line offering superfast speeds would reduce from today’s level of £88.80 a year to £52.77 by 2021. That reduction has to be passed on to consumers.
Matt Howett, an analyst with Ovum, said BT would likely feel threatened by the move and the cuts would reduce the amount of revenue feeding into the business to invest in fibre.
“This really shows that things have to get worse before they can better for BT,” he said.
The new controls could have been worse however as Ofcom has allowed for Openreach to invest in its G.Fast network that speeds up copper lines to deliver ultrafast speeds. A move to install charge controls on everything except full fibre lines would have been more onerous for BT.
Ofcom said that the reduction in superfast prices would preserve competition in the broadband market while encouraging investment in new networks from both Openreach and other providers.