Ofcom has given BT the green light to continue charging higher prices for its full-fibre broadband services in a bid to encourage investment in the network across the UK.
The media watchdog today said BT’s Openreach will be free from price caps on its wholesale offering for at least a decade.
The long-awaited announcement forms a key part of the country’s plans to roll out the high-speed internet services in the coming years.
While BT had been pushing for a 20-year freeze on price caps, the outcome will likely come as a boost to the telecoms giant, which said it believes the proposals will allow it to make a fair return on its £12bn investment.
“This approach encourages investment by providing BT and its rivals with a margin to build the new networks,” Ofcom said.
In a further boost for the former telecoms monopoly, the regulator said BT should not have to bear the costs of running its old copper network alongside the full-fibre network. Ofcom will therefore remove regulation on copper products in areas where full-fibre has been laid over the coming years.
The review also outlined measures to prevent anti-competitive behaviour by reviewing the discounts Openreach offers its wholesale customers and blocking them if they could stifle investment by its rivals.
Kester Mann, analyst at CCS Insight, said: “This crucial ruling is a huge boost for the deployment of full fibre broadband that will benefit millions of UK homes and businesses for years to come.
“It comes at a time when the value of connectivity has never been more appreciated as the pandemic triggers major change in how people live and work.”
Full speed ahead
Openreach is leading the rollout of full-fibre infrastructure across the UK, and its network is used by providers such as Sky and Talktalk.
As a result of the plans, BT today said it will “build like fury” and confirmed its target of reaching 20m homes by mid-2020.
“This is good news for all fibre providers in the UK. For us, it is the green light we’ve been waiting for to get on and build like fury,” said chief executive Philip Jansen. “Connecting the country has never been more vital,” he said.
Openreach boss Clive Selley added: “Today’s regulation will allow us to ramp up to 3m premises per year providing vital next generation connectivity for homes and business right across the UK”.
Despite the positive response, shares in BT dipped one per cent in morning trading.
Ofcom’s announcement was also welcomed by BT’s telecoms rivals, who hailed the support for investment in new infrastructure.
Lutz Schuler, chief executive of Virgin Media, said: “This is a resounding sign of support and longer-term clarity from Ofcom for those rolling up their sleeves to build the nation’s next-generation digital infrastructure.”
Cityfibre boss Greg Mesch said: “This regulation will promote and protect the infrastructure competition that is enabling Britain to go full speed ahead for full-fibre.”