Negotations have begun between Openreach, part of BT Group, and some UK broadband household names. The goal of these discussions is to find ways to reduce the cost of the fastest internet connections available to residential customers in the UK.
Making FTTP services cheaper
Openreach wants to offer larger volume discounts to promote the development of its Fibre To The Premises technology. Since the start of 2020, Openreach has been working to make its fast fibre technology more attractie to big names like Sky Broadband. Other interested parties include TalkTalk and Vodafone. However, not everyone is happy with these latest developments.
Fast Broadband Rivalry
While the big names mentioned above want Openreach to make it cheaper for them to offer gigabit fibre broadband to more Britons, that doesn't mean the whole UK broadband industry is rejoicing together.
It is well known that Virgin Media has raised objections to Openreach making its fast broadband network more accessible to broadband providers other than BT.
Openreach is trying to get more broadband providers on board because it feels the need to take on competition from broadband upstarts like Hyperoptic collectively known as "Alt Net". These smaller providers specialise in fibre broadband and some are setting up their own fast fibre infrastructure, which explains Openreach's urgency.
How will Ofcom respond?
While Openreach has offered discounts before, it has always been under the watchful eye of Ofcom - the UK telecoms regulator. In fact, a Openreach spokesperson stated that their full fibre infrastructure would "always be available to every ISP in the UK under the same prices, terms and conditions."
This shows how much Openreach wants to be seen as a neutral infrastructure partner to the UK broadband sector. All this is very understandable since Ofcom issued new guidance banning targetted regional discounts due to market competition concerns.
There is a silver lining in all of this. Since Ofcom made its position known regarding what types of wholesale deals it would not allow, Openreach and its interested partners now know the kinds of deals they can push through without regulatory risk.
In fact, it seems that Openreach now has more leeway to offer more appealing discounts to providers in competitive areas. This could lead to more gigabit fibre internet options in many towns and cities that already enjoy good connectivity.
What is certain is that any broadband provider who feels left out by the potential wholesale deals currently being negotiated will definitely make their feelings known to Ofcom.
Benefits for customers and risks for Openreach
Only time will tell if these infrastructure deals will result in lower prices for UK broadband customers. More competition should pressure providers to lower their prices if gigabit broadband becomes more common. What also remains to be seen is how higher competition in well connected areas impacts underserved and rural areas which currently suffer from a lack of fast broadband options.
The hope here is that as competition heats up in big towns and cities some providers will decide to branch out into less populated areas. If that is the case, then it will benefit a great number of households.
The flipside here is that Openreach has to find a way to make their infrastructure attractive to broadband providers without endangering their considerable investment in fibre broadband. Additionally, it's worth noting that BT intends to inject over £10bn to boost the reach of their fibre broadband network to 20 million British homes and businesses.
Openreach has to walk a regulatory, political and commercial tightrope as it looks at how to broaden their business. Having the likes of TalkTalk and Sky Broadband wanting to do business can't hurt no matter the outcome of these talks.