{"id":27575,"date":"2021-07-01T08:31:52","date_gmt":"2021-07-01T07:31:52","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=27575"},"modified":"2021-07-02T10:31:04","modified_gmt":"2021-07-02T09:31:04","slug":"openreach-unveil-major-fttp-pricing-offer-for-uk-broadband-isps","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2021\/07\/openreach-unveil-major-fttp-pricing-offer-for-uk-broadband-isps.html","title":{"rendered":"Openreach Unveil Major FTTP Pricing Offer for UK Broadband ISPs UPDATE"},"content":{"rendered":"

Openreach<\/a> (BT<\/a>) has today unveiled a “major<\/em>” change to the pricing of their gigabit-capable Fibre-to-the-Premises (FTTP<\/a>) broadband products, which aims to give UK ISPs not only cheaper services but also “long-term price certainty<\/em>” through a series of new commitments. But in return, providers must push FTTP<\/a> wherever they can.<\/p>\n

At present, Openreach<\/a>’s full fibre rollout has already covered over 5 million UK homes and businesses (1.9 million were added during 2020\/21) and is running at a build rate of c.43,000 premises per week. In addition, Openreach<\/a> are seeing orders for this service – via various ISPs (BT<\/a>, Sky Broadband<\/a>, TalkTalk<\/a>, Vodafone<\/a>, Zen Internet<\/a> etc.) – running at a rate of c.17,000 per week.<\/p>\n

NOTE:<\/strong> 6.2 million premises in their plan are in Ofcom<\/a>’s rural or semi-rural areas (here<\/a>).<\/div>\n

However, the BT<\/a> Group is planning to invest \u00a315bn<\/strong> in order to ensure that this network is extended to 25 million premises (c.80% of the UK) by December 2026, which means that their build will continue to ramp-up until it hits a peak of c.75,000 premises per week (about 4 million premises deployed a year).<\/p>\n

In order to support this, the operator needs to ensure strong take-up by consumers, and to that end they’ve been busy planning future discounts since early 2020 (here<\/a>) and recently restarted negotiations with major ISPs (here<\/a>), like Sky Broadband<\/a>, Vodafone<\/a> and TalkTalk<\/a>. We now have the result.<\/p>\n

What’s Changing?<\/strong><\/span><\/h3>\n

The new offer appears to be based around a set of core principles, which among other things are designed to reward ISPs that help to put any new customers on to FTTP<\/a>, as well as those that migrate or upgrade customers away from their legacy copper line broadband services.<\/p>\n

Openreach’s Offer Principles<\/strong><\/span><\/p>\n

\u00b7 Commitment:<\/strong> where ISPs choose to purchase from Openreach they commit to using FTTP wherever it\u2019s available (including new provides and technology regrades) – rather than older services such as those based on Fibre-to-the-Cabinet (FTTC<\/a> \/ VDSL2<\/a>) or purely copper technology (ADSL<\/a> \/ analogue phone etc.) – with no volume or migration targets.<\/p>\n

\u00b7 Pricing certainty:<\/strong> Openreach will give pricing certainty for up to 10 years in return for this \u2018stop-sell\u2019 commitment
\n
\n\u00b7 Simplicity:<\/strong> A single national rental price will apply to the entire Openreach FTTP footprint
\n
\n\u00b7 Competitive prices:<\/strong> Prices will be competitive whilst offering a fair return for Openreach. ISPs can tailor offers across a range of speed tiers and take-up of higher bandwidths will be encouraged with further rebates, whilst pricing is set by Ofcom<\/a> on the lowest speed tier (40Mbps downstream, 10Mbps upstream).<\/p><\/blockquote>\n

Ofcom<\/a>’s recently revised rules (here<\/a>) require Openreach to give 90 days notice of such changes, partly so they and the market have time to assess its impact. Due to this, the offer will be open for participation between 1st October 2021 and 30th March 2022. The long-term pricing certainty will last until 30th September 2031<\/strong> and be available across the entire FTTP footprint.<\/p>\n

The discounts themselves are available to ISPs where they choose to place new orders with Openreach and commit to making a percentage of those on the FTTP network, where available. A summary of the revised pricing can be found below, and we note that premises in Ofcom’s Area 2 (70% of the UK – those deemed “potentially competitive<\/em>“) will also benefit from a discount on the one-off connection fee.<\/p>\n

\"Openreach-FTTP-Discount-July-2021\"<\/p>\n

Remember, the above reflects wholesale pricing, which means that they don’t account for all the extra costs that an ISP must add (20% VAT, services, network capacity etc.) and thus retail prices, which is what we all pay as consumers, will of course be much higher than this.<\/p>\n

Katie Milligan, MD of Openreach’s Customer, Commercials and Propositions, said:<\/strong><\/p>\n

“Nobody\u2019s building Full Fibre broadband faster, further, or at a higher quality than Openreach, and we\u2019re well on track to reach 25 million premises by December 2026.<\/p>\n

At the same time we\u2019re determined to make Full Fibre the default option for customers throughout the UK, so we\u2019ve been working closely with Communications Providers to offer simple and competitive pricing which gives them the long-term certainty and flexibility they need.<\/p>\n

We believe this offer makes Full Fibre a must-have for every home and business, and it means more people could start benefitting from our most revolutionary and reliable broadband sooner.”<\/p><\/blockquote>\n

Just to put the new monthly rental change in some context, using two of the examples above. At present, if you take out a 115Mbps or 1000Mbps consumer FTTP tier the wholesale charge for an ISP would be \u00a317.44 and \u00a331.57 respectively. Suffice to say that charging \u00a315.50 and just \u00a322 per month for the same tiers, respectively, is a huge change, particularly for larger ISPs. The full price list can be found here<\/a>.<\/p>\n

Ofcom’s recent changes to the market mean they’ll have to follow Openreach’s announcement in a couple of days, not least by asking the industry to submit views so that they can assess the new offer. This is important because some alternative network (AltNet) providers (Cityfibre<\/a>, Hyperoptic<\/a>, G.Network<\/a>, CommunityFibre<\/a> etc.) will no doubt be concerned about any potential anti-competitive impact on their rival services, which are in a weaker position than that of the incumbent.<\/p>\n

By comparison, Openreach will be mindful that many of those new FTTP rivals are often able to offer significantly cheaper and more capable packages (symmetric speeds etc.), which is partly why they may feel a need to make their own services more affordable in order to stay competitive (they don’t want to lose too many of their ISP partners and consumers to rivals).<\/p>\n

Ofcom’s job in all this will be to try and find some balance between the many opposing views, which enables Openreach to get a return on their investment by pushing forward with FTTP, albeit without giving them so much freedom that it potentially causes harm in other parts of the market. It is not an easy task.<\/p>\n

The regulator previously said that they could “restrict<\/em>” any discounts that are too aggressive, but their recent market review left a lot of flexibility for Openreach to play. We await Ofcom’s consultation with interest. At the same time Openreach, as well as other operators, have to be careful about the risk of making FTTP so cheap that it becomes much harder for them to recover their investment.<\/p>\n

UPDATE 2nd July 2021<\/strong><\/p>\n

As expected, Ofcom has begun a new consultation (Call for Inputs) on Openreach’s new long-term pricing offer to ISPs (here<\/a>), which will be open to responses until 5pm on 16th July 2021. A provisional decision is then expected before the new offer is introduced. The biggest interest will no doubt stem from how Openreach’s rivals in the altnet space respond to this.<\/p>\n

Separately, we note that the terms for Openreach’s offer makes mention of a 6-year review mechanism for the offer, which casts a potential shadow over their pledge of “pricing certainty for up to 10 years<\/em>.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Openreach (BT) has today unveiled a “major” change to the pricing of their gigabit-capable Fibre-to-the-Premises (FTTP) broadband products, which aims to give UK ISPs not only cheaper services but also “long-term price certainty” through a series of new commitments. But in return, providers must push FTTP wherever they can.<\/p>\n","protected":false},"author":1,"featured_media":27578,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1,1645],"tags":[474,56,414,69,38,89,71],"class_list":["post-27575","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","category-key_uk_isp_industry_developments","tag-bt","tag-fttp","tag-northern-ireland","tag-bt-openreach","tag-politics","tag-scotland","tag-wales"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nOpenreach Unveil Major FTTP Pricing Offer for UK Broadband ISPs UPDATE - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Openreach (BT) has today unveiled a "major" change to the pricing of their gigabit-capable Fibre-to-the-Premises (FTTP) broadband products, which aims to\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2021\/07\/openreach-unveil-major-fttp-pricing-offer-for-uk-broadband-isps.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Openreach Unveil Major FTTP Pricing Offer for UK Broadband ISPs UPDATE - 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