Openreach has said it will raise the cost of installing and delivering certain “legacy” wholesale products, including FTTP and copper, in order to spread the cost of the ongoing full-fibre rollout.
The move follows this month’s publication of Ofcom’s 2021 Wholesale Fixed Telecoms Market Review (WFTMR), which gave Openreach a greater level of autonomy in how it charges for wholesale residential broadband products.
With Ofcom removing cost-based pricing on copper products, Openreach is able to distribute its infrastructure costs across all customers, and not just those that have opted for a faster (and thus costlier) full fibre connection. Price controls on full-fibre connections are not expected to kick in until 2031 at the earliest.
Published yesterday, the new pricing saw the cost of obtaining a WLR (Wholesale Line Rental, used by third-party ISPs to provide phone and broadband service) jump by 35 per cent (or £10.93) from £31.22 to £42.15.
Openreach has also said it will charge more for ongoing WLR connections, with the price of basic line rental increasing by £4.28 from £92.44 to £96.72 per annum. Premium line rental will increase by £4.32 from £114 to £118.32.
Openreach has also raised the cost of renting a copper MPF LLU line (used for both phone and broadband connections), which will rise by 79p from £85.38 to £86.16 per annum. New MPF LLU connections have increased by 22p, from £24.79 to £25.01.
Installing SOGEA FTTC (Single Order Generic Ethernet Access, or put simply, broadband without the option of added phone line) connections have risen by 60p from £83 to £83.60. FTTC installs with an added phone connection will rise by 43p from £46.84 to £47.27 irrespective of speed.
Line rental is a different story, and the yearly wholesale cost of a basic 18Mbps/2Mbps FTTC connection has increased by 48p (from £48 to £48.48), and the fastest 330Mbps/50Mbps lines seeing a £2.68 hike (from £179.88 to £181.56).
As an ISP, we don’t choose to have customers on what Openreach is now calling a ‘legacy’ product
In a canned statement, Openreach’s director of managed customer migrations, James Lilley, described these price changes as an inevitable consequence of its investment in the UK’s new full-fibre network.
“With the WFTMR giving us the certainty over pricing across our portfolio, we in turn can offer long term stability and choice for our customers. These price changes are a natural shift, and as a heavily regulated business the WFTMR has enabled us to make some modest price increases on certain legacy products to reflect the increasing cost of network maintenance and to encourage customers onto modern, digital alternatives,” he said.
“[W]e’re encouraging providers, homes and businesses to make the switch to FTTP wherever it’s available and sooner rather than later.”
Price rises ‘not actually crazy’… but some customers cannot switch
Lilley also pointed out reductions in the cost of accessing and renting dark fibre, which he said would help support alternative network providers build out their full-fibre networks.
“At the same time, we’ve also implemented price reductions on some of our physical infrastructure access products and we believe that these changes will encourage alternative networks to use our network to help them build,” he said.
These price hikes are fairly modest, with line rental and connection costs only increasing by a few quid, depending on the product being used. Still, given the significant penetration of legacy copper and FTTC connections, they’re likely to provide a significant return for Openreach.
Speaking to The Register, Alex Bloor, general manager of ISP Andrew and Arnold, described these price rises as “not actually crazy,” and added that older products tend to be more expensive to maintain, citing the example of ADSL via a DSLAM versus a more modern fibre to the cabinet connection.
“As more and more customers park themselves on ports of VDSL gear in cabinets, so the number left on ADSL DSLAMs falls. Eventually you reach a point where you’re running and supporting a whole DSLAM in an exchange for four customers.”
Still, he took umbrage with Openreach’s labelling of copper-based products as “legacy” given their ongoing widespread use.
“In general, customers who can get FTTP take FTTP. At least, in our customer base. Customers who can only get a copper based service take the best copper based service they can,” he said. “As an ISP, we don’t choose to have customers on what Openreach is now calling a ‘legacy’ product. Broadly, we have customers on those products because there is no better option. It’s their only choice. So it’s no choice at all.” ®