In an attempt to pull costly support from its copper network, Openreach has agreed to cap wholesale costs for providers who stop selling copper-based broadband products in areas where FTTP is available.
The announcement has come as Openreach moves forward with the removal of its legacy copper and PSTN-based fixed-line products. In March, the BT-owned infrastructure provider said it aims to decommission the copper network by 2026, with analogue PSTN services discontinued by 2025.
Wholesale ISP customers can opt-in to Openreach’s offer between October 1, 2021 and March 30, 2022, with costs capped for ten years, albeit with an annual adjustment for inflation.
According to Openreach’s proposed pricing list, line rental for a gigabit connection (1000 Mbps down, 115 Mbps up) will start at £22, adjusted annually by the CPI inflation rate minus 1.25 per cent or zero, whichever is higher.
At the bottom of the scale, line rental for an entry-level connection (55/10Mbps or 80/20Mbps) will start at £14.75. Price inflation will be in proportion to that of 40/10Mbps packages, where Ofcom has instituted a £13.93 price cap in order to ensure affordability for low-income households.
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These figures may not actually be the real sums charged to ISPs, as Openreach said it may offer rebates for high volume customers. This would give providers even more incentive to push FTTP upgrades to the public.
Openreach has set the connection fee at a flat £99.39, except for households in regions in Ofcom’s Area 2, which is described as a “potentially competitive area.” Here, Openreach said it will charge £25 for a connection that’s new to the network, or £50 otherwise.
Nice bit of irony for the copper flingers
In March, Ofcom published its review of the wholesale Telecom market, where it declined to institute any price controls on wholesale FTTP connections for the immediate future. Why? In order to give Openreach a fair shot at recouping its capital costs.
And yet here it is, introducing its own price caps.
It's a clear signal that Openreach is eager to discontinue the copper network, as it would dramatically reduce its operational expenses, and free up more staff to maintain the new fibre network.
While it has the power to introduce stop-sell orders, these are largely at the pleasure of Ofcom. This move primarily circumvents that oversight by shifting the decision-making to the market. Openreach's hope will be that it gives a financial incentive to customers by offering a degree of price stability, as well as the possibility to reduce the stated line rental costs by selling at scale.
Openreach has said it aims to extend FTTP coverage to 26 million premises by 2026. In April, the company raised its deployment plans following the introduction of a “superdeduction” that allowed it to write-off 130 per cent of its capital costs. As a result, the company will pay minimal tax for the next few years. ®