The cost of UK broadband could fall dramatically over the coming months after Openreach proposed a range of discounts to encourage broadband companies to upgrade millions of customers currently on slower packages.
Openreach is BT’s engineering unit and its network is used by Sky, TalkTalk, BT’s own consumer arm and scores of smaller telecoms companies. It said it would offer discounts of up to 40 per cent to encourage broadband companies to upgrade residential customers to much faster services.
In exchange, the companies will sign up to lengthy contracts that will act as a bedrock for its investment in network upgrades to full fibre lines. The price cuts, levied at the wholesale level, should be passed on to consumers by broadband providers. The steepest cuts will be for packages offering speeds of 80 Mbps, although there will be also lower prices for 40 Mbps lines.
The move comes a day after the government unveiled its framework for future telecoms infrastructure and proposed a series of legislative moves to encourage more investment in full fibre and 5G networks.
Ofcom, the communications regulator, also on Tuesday published its plan for regulatory reform to encourage investment in fibre provision.
Openreach said only 10m homes have upgraded to superfast broadband services from a pool of 28m that the infrastructure needed. It cited figures by Ofcom suggesting that 4m of these homes could upgrade to faster speeds at no extra cost.
Openreach said it has invested £11bn in its network over the past decade but it needs to drag speeds higher to create consumer demand for the gigabit broadband over full fibre lines, which is more than 20 times faster than the current UK average.
Katie Milligan, managing director of Openreach’s customer unit, said: “The Chancellor has thrown down the gauntlet on full fibre and we’ve been clear we want to be the national leader. But we need to ensure Britain is on the best broadband possible today. The story has always been ‘build it and they will come’ but that model does not work for us.”
Tristia Harrison, chief executive of TalkTalk, said the lower prices would bolster the competitive nature of Britain’s broadband market and help value-oriented providers. “This is good news for customers who want faster speeds,” she said.
The price cuts are the latest sign that tensions are easing within Britain’s telecoms sector after a fractious period when BT was at loggerheads with its rivals over the pace of investment in fibre.
BT last year agreed with Ofcom to legally separate Openreach into an independent but wholly owned company.
Ms Harrison praised Openreach’s “intent” since the split. “The proof is in the pudding over the next two years, not just on pricing but also on service,” she said.
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