Openreach Offer FTTP Broadband Discounts to Boost Take-up

Openreach (BT) has launched new discounts on their 1Gbps capable Fibre-to-the-Premises (FTTP) broadband network in UK “Fibre First” cities and towns, which will start on 1st January 2020 and seem designed to encourage ISPs to build stronger take-up in return for reductions on service rental and connection fees.

The network access provider currently aims to cover 4 million UK premises (homes and businesses) with their new “full fibre” network by March 2021 (so far they’ve done about 1.9 million) and then there’s an ambition to reach 15 million by around 2025 (latest rollout update). As part that there’s a strong desire to build take-up among consumers and so some new performance based discounts have been developed.

The new approach appears to complement similar proposals for a more localised discount last month (here), although this new offer is more widely available and has different eligibility criteria. The new connection and rental discounts will also be available on all premises that are declared as Ready for Service (RFS) on or before 31st March 2021 2020 (i.e. those deployed under the commercial Fibre First rollout).

The special offer itself will start on 1st January 2020 and will then be open to participation for 12 months. On top of that ISPs will be eligible for free bandwidth modification when upgrading to higher speeds, until 30th September 2022, and there’s further flexibility during the first 6 months of the offer (see OR’s briefing for more).

OR Briefing Statement

In order to be eligible for discounts [ISPs] must commit to (i) achieving a high target of FTTP new provides as a percentage of total new provides in the footprint. In months 1 to 9 from the start of the offer, the FTTP target is 70%, increasing to 85% in months 10, 11, and 12, and 90% thereafter until the end of the offer (ii) having GEA Cablelinks in place or on order in the areas they plan to consume Openreach FTTP.

Aside from the possibility of a free connection, we note that annual rental charges will also be reduced on their FTTP Data Variant (no copper phone line required), although these are a little bit different from the previously proposed discounts last month (discounted prices for the 160Mbps and 220Mbps tiers have risen a little).

Just for comparison, Openreach’s 220Mbps (30Mbps upload) tier normally attracts an annual rental of £255.36 +vat and their new 1000Mbps consumer tier, which due to go live until 2020, normally costs £375.36 +vat. Likewise it’s not a mistake that the two slowest tiers carry the same price (they seem to be pushing take-up toward the faster tiers).

Otherwise the usual caveat applies in that these are wholesale charges and thus do not include all of the many other elements that an ISP has to add, which is necessary in order to create the retail price that you will ultimately have to pay at retail (e.g. 20% VAT, profit margin, capacity, service / network features etc.).

UPDATE:

Small correction. On the original briefing it incorrectly stated that the discounts will also be available on all premises that are declared as Ready for Service (RFS) on or before 31st March 2021, although Openreach has now corrected this to March 2020, which makes much more sense.