Broadband costs could come down after Ofcom ruling

The Ofcom decision could see broadband costs come down for consumers. Picture: PA

The watchdog is to force Openreach – the network access division of former state telephone firm BT – to reduce the amount it charges to third party telecommunications operators such as Talk Talk and Sky, which it hopes will then be passed on to the consumer.

The annual reductions are expected to be in the region of just £7 per household, but consumer groups welcomed the proposals as a step in the right direction. “Any measures that encourage stiffer competition in the market are welcome, as they should make copper broadband and landline services more affordable,” said Marie-Louise Abretti, broadband expert at uSwitch.com. “Although the potential savings are fairly minimal every little helps when households are feeling the pinch, especially when it comes to cutting the cost of a household essential.”

The wholesale prices have historically been regulated by Ofcom because BT has been found to have “significant market power” in the delivery of these services – which was confirmed last week by the regulator’s Fixed Access Market Reviews to still be the case. “As a result, Ofcom is proposing revised charge controls on some Openreach products,” Ofcom said in a statement. “These controls would reduce wholesale charges, which could be expected to lead to real-terms price reductions for consumers, as communications providers pass on savings to their landline and broadband customers.”

The proposed new prices, which would see Openreach charge between two and 12 per cent less for using their lines, are designed to provide incentives to invest in networks, while ensuring broadband and landline prices are affordable.

Ofcom also said competition had expanded into more rural parts of Britain over the last three years, as providers have rolled out their own networks.

The proposals need Ofcom work on quality of service and fault levels on BT’s copper network. Ofcom said it would consult on the plans later in the year if there were any modifications needed to the proposals.

Consumer experts warned the public needed to be made aware of the reduction in costs to pressure providers to pass it on.

“It may take a while before Ofcom’s charge proposals come into effect but this is really good news for broadband and phone customers,” said Dominic Baliszewski, telecoms expert at broadbandchoices.co.uk.

“However, many households may not even be aware that their provider is using Openreach to provide their service.”

A spokesman for BT said: “There are a number of areas where we believe Ofcom have not fully recognised the costs of providing services.”