The cost of changing superfast broadband providers on the BT network will fall from £50 to £11 – but BT will still be free to charge ISPs what it wants.
Communications regulator Ofcom has ordered network provider BT Openreach to cut the cost of switching providers for FTTC (fibre to the cabinet) broadband – currently taken by around 2.7m homes.
There’s also a shorter minimum contract, but Ofcom didn’t grant TalkTalk’s wish for Openreach’s fibre prices to be regulated.
“Currently, if a consumer wishes to change superfast broadband provider, the company they are switching to must pay a £50 fee to Openreach – which is often passed on to the customer,” said the latest statement in Ofcom’s Fixed Access Market Review 2014.
“Ofcom intends to cut this wholesale fee to £11, which would allow providers to offer lower retail start-up fees.”
We’ve asked BT, TalkTalk and Sky how the changes will shake out into consumer pricing and contracts.
It’s likely they’ll be able to absorb an £11 charge into their monthly charges and may be able to reduce minimum contract lengths to 12 months, or even offer rolling one month superfast broadband services.
Ofcom said it will continue to monitor the cost of FTTC from Openreach, which supplies connections to all national ISPs except Virgin Media, but it won’t impose any changes now.
“Ofcom is not intending to set the level of wholesale prices for Openreach’s fibre service, as it believes the price of fibre broadband is currently constrained by the availability of standard broadband services, and by competition from Virgin Media’s cable network,” Ofcom said.
“Ofcom will soon propose new guidance on its future approach to the ‘margin’ that BT sets between its wholesale and retail fibre prices.”
The statement was a rare success for Ofcom, winning praise from both BT and its rivals despite pleasing some and disappointing others.
BT said: “We are pleased that Ofcom has acknowledged the success of the current regulatory framework by maintaining pricing freedom for Openreach’s fibre products.
“The UK boasts one of the most competitive markets in the world with around 140 CPs selling fibre via our open wholesale network, whilst more than 3.2 million households also take superfast broadband from Virgin Media.”
TalkTalk said: “We are pleased that Ofcom is acting to ensure BT Openreach deliver a good service, with strong targets and penalties if they fail to deliver.
“We have long called for this on behalf of our customers and Ofcom is right to intervene. We are also pleased to see Ofcom reiterating its intention to take action on fibre margin regulation.”