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Regulator’s Decision Means Cheaper Guernsey Broadband Prices

Monday, Dec 18th, 2023 (4:31 pm) - Score 1,280
Channel-Islands-2023-Map-Guernsey-and-Jersey

The Guernsey Competition & Regulatory Authority (GCRA) has posted its “final decision” on wholesale broadband charges for the English Channel Island of Guernsey, which has called for prices to be slashed by a significantly greater amount than the 11% reduction first proposed in May 2023.

At present, Sure (Guernsey) Limited remains the dominant provider of these wholesale services on Guernsey, which ISPs must pay before they can sell packages on to consumers. The operator is currently also working alongside the States of Guernsey on a joint £37.5m project to build a new Fibre-to-the-Premises (FTTP) network across the whole of Guernsey (30,000 premises) by the end of 2026 (here), which has already covered 9,000 premises and rising.

Residential packages on the new network, from Sure, start at £46 per month for a basic 50Mbps plan, which rises to £62 for 150Mbps, £106 for 1Gbps and £213 for 2Gbps. Suffice to say, it’s not particularly cheap compared with the wider UK market, but then competition and limited subsea capacity links remain an issue.

However, in May 2023 the GCRA provisionally concluded a new assessment of broadband pricing at the wholesale level (here), which found that the average level of Sure’s wholesale broadband prices was still higher than the efficient level of its costs. In response, the regulator proposed that wholesale broadband charges should be lowered by 11% on average to create a “better deal for end-users while ensuring profits are reasonable.”

What’s Changed in the Final Decision?

According to the regulator’s final statement on the matter, the original figure of 11% overlooked something very important that was “later brought to its attention … that additional line rental revenue to Sure that was necessary for broadband retailers to deliver internet access to their customers was not fully accounted for in that initial assessment.” After including the line rental revenue, the average reduction in those charges was greater.

GCRA’s Statement

The GCRA has decided in this Final Decision to set the average charge for Sure’s wholesale broadband in the relevant market at £26.40/month over the 2024-2028 price control period, which equates to a 31% reduction. The pricing structure as set out in Section 7 of this document will be applied from 1 April 2024 to end December 2028.

The estimated reduction in Sure’s wholesale broadband revenues for the first full year of the price control in 2025 is £2.9million, (a reduction from Sure’s 2023 revenues of £11.1 million to projected revenues of £8.2 million for 2025). If these price reductions were passed on to retail customers, they would see an average annual saving in 2025 of £116.

Despite the reduction in charges, the GCRA claims to have ensured that Sure can fund its ongoing full fibre investment (upgrade) programme and earn a reasonable return. The GCRA conducted an extensive review, accounting for Sure’s costs and revenues in the coming years as it rolls out the fibre network. “This was done to ensure that the reduction in charges still enables Sure to recover its efficient costs and does not undermine Sure’s ability to finance its fibre network roll-out,” said the regulator. Credits to the BBC for spotting this development.

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Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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Comments
4 Responses
  1. Avatar photo Shaukat says:

    The review, was started back in May 2023 according to the BBC.
    https://www.bbc.co.uk/news/articles/crg2y0313d5o

  2. Avatar photo Billy Shears says:

    It looks like pricing is being used to throttle demand rather than being a reflection of costs.

    1. Avatar photo N says:

      Not to throttle demand, just to make more revenue overall. If you can charge 50/month and only have 1-2% fewer customers than if they charged £25 then it’s quite smart.

      Ultimately it’s more or less a necessity so it’s not very price elastic in a monopolistic environment. Especially if you also own the main mobile company and a undersea cable to enforce your position (as sure do).

    2. Avatar photo XGS says:

      Reminds me of where Telstra were in Australia not all that long ago.

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