BT told to cut prices and speed up line installations

Telecoms giant BT must 'significantly' cut prices charged for high-speed lines through its Openreach arm and improve business services under detailed plans outlined by the communications watchdog.

BT has been told to install business lines more quickly and start reducing its prices. Picture: Rod Kirkpatrick/VisualMedia/PA

Ofcom confirmed plans to force BT, which is the owner of the UK’s biggest fixed-line network, to install business lines more quickly and start to reduce prices from May 1.

The draft proposals, which confirm plans first put forward last year, come less than a month after Ofcom told BT it must open up its Openreach network to competitors in its first significant review of the telecoms sector for a decade.

Ofcom wants BT to propose prices and terms for rivals to install their own equipment to use its fibre connections.

It is also aiming to enforce tougher rules on faults, repairs and installations for consumers, clearer information on service quality, and automatic compensation for consumers when services are disrupted.

Jonathan Oxley, Ofcom competition group director, said: “All of us depend on high-speed, fibre-optic lines. Businesses use them to communicate, and they also underpin the broadband and mobile services used by consumers at home and on the move.

“BT is relied on by many companies to install these lines, and its performance has not been acceptable. These new rules will mean companies across the UK benefit from faster installation times, greater certainty about installation dates, and fast repairs if things go wrong.”

Ofcom said BT takes 48 working days on average to install a business line – which has increased significantly over the past five years.

But under the watchdog’s plans, the group will have to reduce this to 46 working days by the end of next March, dropping to 40 days the following year.

Ofcom said: “Openreach is taking too long to install leased lines and is not providing adequate certainty that the services will be provided by the date first given to the customer.”

Faults will also have to be fixed quicker, with at least 94 per cent repaired within five hours by the end of March 2017, up from 93.1 per cent in 2011.

The planned price cuts will see charges for its new ethernet lines reduced by 12 per cent initially, with further reductions linked to inflation over a three-year period. Prices on traditional, older leased lines will come down by 9 per cent initially, with further falls also linked to inflation.

Ofcom said this “provides an incentive for BT to make efficiency gains”. Its new rules are set to be finalised by the end of April, but are subject to consideration by the European Commission.

It wants BT, which last week named former ScottishPower executive Simon Lowth as its new finance chief, to publish a draft “reference offer” for industry, containing wholesale pricing and terms for access to its fibre network, by September.

This would then be open to negotiation between BT and other providers, with a view to BT publishing a final reference offer by December and opening up its network in October next year.

A BT spokesman said: “Competition and choice have been growing in the business connectivity market and we believe there is a strong case for less, not more, regulation.

“We accept there is more to do on service and are committed to doing better and meeting our business customers’ rising expectations. Ethernet provision can be complex and the need for street works and wayleaves mean delays are often beyond our control. We are doing all we can to overcome such challenges. The required ethernet price cuts and the introduction of dark fibre will not help to underpin service improvement.”