BT shares rise as regulators raise wholesale price caps

Oliver Gill
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BT's Openreach will be able to charge rivals more under today's plans (Source: Getty)

BT investors were buoyed this morning by a regulatory announcement on the price it can charge its rivals to use its network.

With shares rising almost four per cent, BT was one of the FTSE 100's biggest gainers.

Ofcom said it would not regulate the prices charged by infrastructure arm Openreach on its fastest broadband products.

Meanwhile, for the next notch down – so-called superfast broadband – regulators said increased a cap on what Openreach can charge the likes of Sky, Vodafone and TalkTalk. Previous proposals limited prices to £11.23 a month by 2021. After consulting on the matter, this is to be increased to £11.92.

However, Ofcom said it will roll out new stricter rules forcing BT's infrastructure arm to "repair faults and install new broadband lines more quickly".

It also called on BT to make telegraph poles and underground tunnels more easily available to rivals.

Read more: BT shares drop 5.5 per cent on results: Here's how the City reacted

What Openreach said

Openreach said the watchdog's plans provide "certainty on their approach to key products and we welcome Ofcom’s intention to support investment in full fibre networks".

But to incentivise further investment in broadband infrastructure firms like Openreach need to be "certain they can secure a return on their investment and a fair bet".

A spokesperson added: “Continuing to improve service is our number one priority, having exceeded Ofcom’s broadband targets for the last three years. We view these as a minimum, not a target, and we’ve been making great strides over the last year in reducing the number of faults on our network and speeding up new connections and repairs. We’re determined to go even further so we support the ambition of higher service standards.”

Our ducts and [telegraph] poles have been open since 2011 and we have been sharing a digital map of this network for more than a year.

“We’ve been making the process more accessible and user-friendly and we’ll now work closely with our customers to consider how to develop and implement these latest proposals effectively."

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What Ofcom said

“Ultrafast speeds will allow people to download entire films, or businesses to share huge files, almost instantly. Full fibre will also underpin exciting technology like remote healthcare diagnostics, 5G mobile and connected devices," said Ofcom’s competition group director Jonathan Oxley.

“The measures we’ve set out today will support the growing number of companies who have already announced plans to build full-fibre networks, and open the way for even more ambitious investment around the UK.”

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What BT's rivals said

TalkTalk Chief Executive, Tristia Harrison, said: “Ofcom’s strong decision is good news for consumers, competition and investment. We have long argued that Openreach has no incentive to invest in the full fibre broadband that Britain needs when it could make excess profits by overcharging for copper-based services.

Ofcom’s move not only protects customers in today’s market, but also ensures Openreach and others are encouraged to invest in the full fibre networks of tomorrow.

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What the government said

Fresh from partying at this week's Brit Awards, culture secretary Matt Hancock said: "Full fibre is vital to build a Britain that's fit for the future.

Ofcom's measures will be instrumental in supporting full fibre roll-out by promoting competition and ensuring widespread availability of these services. The whole telecoms sector must now come together - in the national interest - to invest in the digital infrastructure that the UK needs and become a model of great customer service."

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What consumer champions said

Richard Neudegg, head of regulation at Uswitch said: “This focus on future investment alongside strong competition is critical... We especially welcome Ofcom’s decision to bring down the wholesale price for entry-level fibre broadband by nearly £20. Now the challenge is how the industry uses this to improve more consumer’s broadband experience and reduce the cost of bills.

“A word of warning - the move to lower wholesale entry-level pricing, designed to help drive the uptake of superfast services, risks being a wasted effort if the industry doesn’t also urgently make changes that help surface the information that matters most to consumers when considering their broadband package.

“To date, broadband providers have previously been guilty of a ‘build it and they will come mentality’ so whilst measures to encourage further investment teamed with a reduction in wholesale price for the entry-level product is clearly welcomed, more must be done to help bring consumers along on the journey.”

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