BT sees negative hit from cuts to wholesale prices

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Full fiber broadband is many times faster - and around five times more reliable - than today's superfast internet services, but is available to just 3 percent of Britain's homes and businesses, Ofcom said on Friday.

However, it is only available to just 3% of United Kingdom homes and offices. "Full fibre will also underpin exciting technology like remote healthcare diagnostics, 5G mobile and connected devices", said Ofcom's competition group director Jonathan Oxley. Ofcom now believes that overlapping fast fibre networks built by BT and its rivals will deliver more innovation and a better deal for consumers.

"Under the plans, BT must make its telegraph poles and underground tunnels open to rival providers, making it quicker and easier for them to build their own full-fibre networks directly to households around the United Kingdom", it said.

CityFibre and Vodafone, and Hyperoptic have committed to a further 10 million by 2025.

And Openreach will have to fix faulty infrastructure and clear blocked tunnels where necessary for providers to access them.

"The measures we've set out today will support the growing number of companies that have already announced plans to build full-fibre networks, and open the way for even more ambitious investment around the United Kingdom". It said that could halve the upfront costs of laying fibre cables to £250 per home.

It added that telecoms firms needed to "be certain they can secure a return on their investment" if a nationwide rollout of full fibre was to be realised.

Ofcom seems mindful of this and has proposed a fresh set of regulations, largely aimed at BT's fixed-line wholesale arm Openreach, which are created to both encourage fresh fibre to be laid, but at the same time keep "superfast" broadband affordable for everyone by lowering what Openreach can charge other providers for its 40 Mbps service.

It is hoped the move by Ofcom will encourage competing providers to invest in their own networks, rather than buying the wholesale service from BT.

In March 2017, the regulator proposed to set the monthly charge for Openreach's "40/10" Mbit/s broadband package by 2021 at £11.23.

These plans could take coverage of full-fibre in the United Kingdom from three per cent today to up to 20 per cent by 2020.

Additionally, BT will be banned from reducing its wholesale prices in areas where rival networks are starting to lay infrastructure.

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The draft measures from Ofcom have been submitted to the European Commission for comment, and a final statement is expected in the next month.

The regulator has also published a list of measures Openreach will need to conform to including; completing at least 88 per cent of fault repairs within one or two working days of being notified, up from 80 per cent now and completing at least 97 per cent of repairs within seven working days.

These new requirements must be met by 2020/21.

It estimated that the price changes in the draft statement, for the directly charge controlled products, would have a year on year adverse financial impact on Openreach's revenue and profit in 2018/19 of between £80m and £120m.

"Today's statement from Ofcom gives us certainty on the pricing of key products for the next three years", the company said.

There will also be ongoing annual costs, and Openreach's cost base will increase as a result of meeting the more demanding minimum service levels required in WLA markets.

Ofcom has said that the decision not to regulate the prices of Openreach's fastest wholesale superfast broadband products, including its new full-fibre services, supports the incentives for operators to build full-fibre networks.

Further, it said the net impact it would have on the overall group would depend on dynamics in the retail market.

It should be noted that Openreach already planned to reach 12 million homes by the end of the decade using a combination of fibre to the premise (FTTP) and G.Fast, which speeds up copper connections.

Addressing the restriction on varying its wholesale prices, BT said it was "considering the implications for full and fair competition".

Talk Talk said the announcement was "good for consumers, competition and investment".

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