Tuesday, 7 February 2012

Openreach price cuts of up to 19% expected

Telecoms regulator Ofcom has announced the latest price controls that they are applying to the Openreach access division of BT, something that they are empowered to regulate given that Openreach has significant market control in having all non cable fixed line broadband lines in the UK connected to them.

The regulated pricing - which also affects what Openreach charges for telco lines - will drop by up to 19% from April, with further cuts also proposed for next year.

ThinkBroadband have summarised the changes that Ofcom are proposing to the European Union in a handy table:
BT have said that they are considering appealing the proposed changes though as they do not agree with some of the assumptions used to make the calculations. Emphasising that a "fair" level of pricing is needed for them to continue to invest in infrastructure, a spokesman said:
"Whilst the prices are within the range outlined by Ofcom in November, we disagree with some of the underlying assumptions that they have used to determine these charge controls.

Our primary concern throughout this process is to ensure that we are able to achieve a fair rate of return in order to continue our investment in the future of the UK's communications infrastructure."
The other big question is whether ISPs that purchase services from Openreach will pass the cost savings on to their end customers or absorb it within their margin, something that both Sky and TalkTalk claim it is too early to say on which way it will go.

The latter welcomed the price reduction though, saying:
"This reflects that BT's charges have been excessive in the past."