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(Alliance News) - UK telecommunications regulator Ofcom said Wednesday it will be capping some Openreach prices, but will also allow it to recoup some investment on rural fibre networks.
In June, Ofcom announced new rules allowing rivals of BT Group PLC, which owns Openreach, access to the Openreach infrastructure to accelerate to rollout of fibre networks across the UK. Openreach is wholly-owned by BT, but has its own board to allow for some independence.
BT shares were 3.2% higher on Wednesday morning at 198.16 pence each, making it the best performing FTSE 100 stock early on.
Ofcom has now unveiled four proposals to "supercharge" the expansion of the UK's fibre infrastructure.
In more urban areas, where there will be a choice of networks, Ofcom will set Openreach's wholesale prices to encourage competition from new networks. Wholesale prices charged by Openreach to retail providers for its entry-level broadband service would be capped to inflation.
However, Openreach would be allowed to charge a "small" premium for some products if they are delivered over full fibre.
In rural regions, where there is little prospect of multiple fibre networks, Openreach will be allowed to recover investment costs across the wholesale prices of a wider range of services, to encourage investment.
Ofcom, if BT promises to build fibre networks in certain rural areas, would allow Openreach to include the costs of this investment in upfront wholesale prices. If not, the costs would only be permitted to be recouped after new networks have been built.
Turning to the old copper network, Ofcom will cap wholesale prices charged by Openreach. To encourage competition, Openreach will not be allowed to offer discounts on copper services.
Ofcom will also help Openreach wind down the "ageing" copper network, and enact measures to help Openreach move customers onto new fibre networks.
Ofcom's interim Chief Executive Jonathan Oxley said: "These plans will help fuel a full-fibre future for the whole country. We're removing the remaining roadblocks to investment and supporting competition, so companies can build the networks that will drive the UK into the digital fast lane.
"Full-fibre broadband is much faster and more reliable. It's vital that people and businesses everywhere - whether in rural areas, smaller towns or cities - can enjoy these benefits. So we're making sure companies have the right incentives to accelerate full fibre to every part of the UK."
The current consultation on fibre networks ends at the start of April, with decisions to be published early in 2021. The current rules expire April next year.
By George Collard; georgecollard@alliancenews.com
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