Bonus for ISPs Sky Broadband and TalkTalk as Openreach Cut LLU Rentals

Ofcom has announced that fully unbundled (MPF) ISPs, such as Sky Broadband and TalkTalk, will benefit from a small reduction to their annual Openreach (BT) wholesale charge for related customer lines to £84.38 +vat (currently £85.29), effective from 1st July 2017.

As a quick reminder, unbundled (LLU) ISPs are those providers that have invested to install some of their own equipment inside BT’s national network, which gives them more control and price flexibility over certain services. In this case the price reduction only applies to the cheapest service maintenance level 1 – MPF SML1 – rentals (i.e. those with a stated repair period of two working days), which is used by some of the biggest ISPs (more here).

In the grander scheme of things this is only a small reduction and consumers should not expect to see any immediate change in their bills, although Ofcom does eventually aim to force the rental price down to £82.28 and that will have a more noticeable impact. However we’d still expect overall prices to go up because ISPs continue to face rising costs from surging data usage and new government regulations etc.

Regulator’s Statement

On 31 March 2017, the charge controls set in the 2014 Fixed Access Market Reviews expired. We are presently consulting on new charge controls in the Wholesale Local Access (WLA) market review, to apply from 1 April 2018.

In March, Ofcom consulted on a fair and reasonable charge of £84.38 for the wholesale product ‘MPF’ at Service Maintenance Level 1 (MPF SML1), in the period prior to the introduction of new charge controls. This was our forecast of the price in the first year of a glidepath from BT’s current price (£85.29) to our proposed charge control for MPF SML1 in 2019/20 (£82.28).

Recently Sky Broadband, TalkTalk and Vodafone have all moaned at Ofcom because of the delay to the start of their latest Wholesale Local Access Market Review, which they claim could have cost them an awful lot of money (here). Today’s news is related to that issue (more here).