UK: Ofcom moves to increase competition in superfast broadband market

Ofcom plans to change the terms of access to BT's Openreach network

Ofcom plans to change the terms of access to BT's Openreach network

Superfast broadband customers will be offered cheaper and shorter deals and be able to switch more easily between providers under proposals by Ofcom to open up BT’s fibre cable network to enable greater competition.

Suppliers will be allowed to buy wholesale access to BT’s Openreach network for as little as a month rather than the current minimum of a year, allowing them flexibility to offer customers contracts that do not tie them in for long periods.

In addition, a one-off £50 fee paid by smaller providers such as TalkTalk to Openreach each time they take on a customer should be reduced, Ofcom said.

BT is rolling out its superfast fibre network across the country and the Government has pledged to subsidise part of the programme, but some critics are unhappy about the way it sells wholesale access to the technology.

Ofcom said its proposals for consultation, designed to promote competition between rival broadband providers, would see the wholesale cost of switching a customer from one superfast broadband to another fall by up to 80%.

“These would be expected to flow through to consumer benefits in the form of lower retail prices and easier switching between superfast broadband providers,” Ofcom said.

However, the regulator stopped short of setting controls on the rate charged by BT to rivals for use of its network, saying this was already constrained by competition from rival Virgin Media’s superfast cable network and the availability of other, standard, broadband services.

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It also said it did not want to “undermine the investment case for rolling out fibre”. The regulator proposed to maintain a requirement that charges for access to the network were “fair and reasonable”.

Ofcom said it was also considering new minimum standards to ensure Openreach - which installs and maintains connections to the BT telephone and broadband network on behalf of rival providers - maintains an acceptable level of performance.

The regulator said competitors had expressed high levels of concern during last year about the time it had taken for Openreach to install and repair new lines for their customers, though performance had since picked up again.

Ofcom’s proposals form part of a wide-ranging review three years after it introduced the process for allowing rival providers to sell services over BT’s superfast network - which at the time had fewer than 100,000 connections. By last year the number had risen to 1.4 million.

The regulator said: “Currently, if a consumer wishes to change to a superfast broadband provider, the company they are switching to must pay a £50 fee to Openreach - a charge which is often passed to the customer.

“Ofcom is proposing to cut the switching fee to between £10 and £15 and, where an existing superfast customer switches, to reduce the minimum length of the wholesale contract between BT and the new supplier from a year to a month - providing flexibility to allow telecoms providers to offer shorter-term contracts.”

BT said: “We are pleased that Ofcom is maintaining pricing freedom for Openreach’s fibre products.

“BT has already accepted a long payback period for its fibre deployment and its wholesale fibre prices - which are amongst the lowest in Europe - reflect this.

“Openreach is committed to delivering high levels of customer service. Openreach is already highly transparent in its service level reporting to industry and agrees this detail should be shared with consumers and businesses.”

A source said more than 70 companies were already offering fibre over BT’s network on the same terms as the BT Retail division, so it was already an open market. It was also pointed out that BT Retail, like all providers, faces the one-off £50 fee for switching to a superfast broadband supplier.

TalkTalk said: “TalkTalk is pleased Ofcom is taking the issue of fibre regulation so seriously.

“TalkTalk has consistently maintained that fibre is too important for future economic growth to be monopolised by BT, and that for this reason access to fibre must be regulated.

“We welcome Ofcom’s proposals, which we believe will lead to a more competitive market and better outcomes for consumers, businesses and the UK economy.”