Openreach Cuts UK ISP Wholesale Prices for FTTP Ultrafast Broadband

Openreach (BT) has today announced that they’re cutting the wholesale prices of their Fibre-to-the-Premises (FTTP) ultrafast broadband lines from 1st September 2019, which is intended to help encourage take-up of the new service by ISPs (provided Ofcom approve their proposed changes, which they probably will).

The move is designed to support the operator’s on-going work to cover 4 million premises (homes and businesses) with “full fibre” FTTP across the United Kingdom by March 2021, which could be extended to 15 million by around 2025 and they may even go beyond that if the conditions are right (e.g. easier wayleave agreements, extension to the business rates holiday etc.).

So far around 1.5 million premises have already been reached and their rollout is continuing to ramp-up (currently passing 20,000 homes and businesses every week), although so far neither TalkTalk nor Sky Broadband have begun to sell the service (although they are planning to launch related packages in the very near future). Aside from BT, most of the other FTTP offering Openreach ISPs are smaller players.

Meanwhile Openreach is facing aggressive competition from smaller Alternative Network ISPs (e.g. Cityfibre / Vodafone, Hyperoptic, B4RN, Community Fibre etc.), which are often able to offer ultrafast broadband speeds at significantly lower prices (partly due to the advantages of not being impeded by a legacy of regulation). Not to mention Virgin Media’s ever expanding and soon to be Gigabit speed network.

Realistically the operator may struggle to match the pricing of their more nimble competitors but they have at least today moved to make their own services more attractive and, unlike previous promotions, this does not require a volume commitment by ISPs. Providers can expect a 36% reduction on 330Mbps tiers, a 20% fall on their 110Mbps product and a 10% reduction on their 40Mbps tier.

As usual we must stress that these are wholesale prices and you will always pay a fair bit more at retail, not least because ISPs have to add the cost of delivering their own services to you as well as network capacity / features, 20% VAT and a profit margin on top etc.

Openreach also plans to introduce new 500Mbps and 1Gbps variants of its FTTP service later in the financial year 2019/20 (shown above), with lower upload speeds and pricing aimed at attracting consumers (inc. home workers). At present the existing pricing for 500Mbps and 1Gbps is aimed at SME business users (details) and so tends to be a fair bit more expensive (particularly given the £500 one-off connection fee on those two tiers).

The pricing for the new consumer 500Mbps and 1Gbps tiers is still being determined and so at present Openreach is not yet ready to confirm the details.

Katie Milligan, ORs MD for Customer, Commercial and Propositions, said:

“We’re making great progress on our full fibre build programme and our discussions with customers about upgrading the country have been encouraging so far. Naturally pricing is fundamental to that shift and we want to give our wholesale customers the confidence to invest at scale in their own full fibre products and services using our network. To do that, we’re offering them a greater incentive to switch their customers to a full fibre world, with more competitive pricing and a wider choice of products.

These price changes are a win/win for Communications Providers, their customers and Openreach. We believe they will encourage the UK’s homes and businesses to experience the benefits of faster and more reliable broadband. We hope they’ll incentivise our wholesale customers to consider the longer-term benefits of upgrading more of their customers to ultrafast Fibre to the Premises technology, particularly their customers who are currently using superfast Fibre to the Cabinet services.

At Openreach, we know that upgrading people onto future proofed full fibre broadband will keep the UK at the forefront of the global digital economy – boosting productivity, growth and prosperity. We want to start reaping those benefits now, so we’re encouraging providers, homes and businesses to make the switch to FTTP wherever it’s available and sooner rather than later.”

Clearly one of the most interesting changes is on their 330Mbps tier, which has seen the sharpest price reduction and that should help to make it much more competitive. Once again though it will be up to the ISPs to decide whether or not to pass these savings on to consumers but most probably will as it’s not a very competitive market.

Finally, we should point out that Openreach are also quietly preparing to trial a new range of symmetric speed 1Gbps and 550Mbps packages, which is something we leaked last month (here). Given today’s news it seems reasonable to assume that this is what the operator means when they talk above about “further business grade ultrafast variants” being “under consideration.”