Ofcom is proposing to slash the cost of BT Openreach's wholesale broadband for companies like Sky, Zen and Vodafone, and says that any savings made should be passed directly to consumers in the form of lower prices.
The communications regulator wants to cut the wholesale price that Openreach can charge telecoms companies for its ‘superfast' broadband service, which claims to have a download speed of up to 40 Mbit/s. Although the likes of Sky and TalkTalk are rivals of BT, they use BT's network to offer broadband services to their customers.
But cutting the costs aren't meant to increase the revenue margins of Sky and TalkTalk. Instead, Ofcom says it "expects these savings to be passed on to residential customers through cheaper prices".
Ofcom intends to reduce Openreach's charges for its ‘40/10' Mbit/s broadband package, with the price falling from today's level of £88.80 per year to £53.77 in 2020/21.
The ultimate aim is to promote competition in the broadband services most customers use today, while companies work on delivering fibre-to-the-home (FTTH) networks that can compete with Openreach's fastest current broadband products, including its G.Fast technology, and a FTTH proposition it calls ‘fibre-to-the-premises' (FTTP).
These products are not subject to a cap because Ofcom believes the ‘40/10' Mbit/s package should be sufficient to protect competition and consumers from higher prices.
Repairs and installations
Ofcom also wants to place stricter requirements on Openreach to repair faults and install new broadband lines more quickly.
The regulator has opened up a consultation on these requirements, and has also proposed a stricter regime on diagnosing and fixing faults, requiring Openreach to:
- Fix 93 per cent of fault repairs within one to two working days of being notified (compared with 80 per cent today);
- Complete 97 per cent of repairs within six or seven working days;
- Provide an appointment for 90 per cent of new line installations within 10 working days of being notified (compared to 80 per cent within 12 days today); and,
- Install 95 per cent of connections on the date agreed between Openreach and the telecoms provider (up from 90 per cent today).
The new requirements would need to be met in full by 2020/21, while Ofcom has also proposed transitional targets to ensure progressive improvements in service before then.
If Openreach doesn't meet the required standards, Ofcom will step in and has the power to impose fines. Ofcom has emphasised that the whole sector - not just Openreach - has a role to play in delivering a significantly better quality of service than it does today.
Jonathan Oxley, Ofcom's 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".
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