Openreach to further reduce full fibre broadband pricing

For the second time in little over a year, Openreach are soon to announce further reductions in wholesale network access and pricing on their full fibre plans.

While this is good news for consumers who are likely to see increased pricing competition on full fibre broadband plans from April 2023, rival networks like Virgin Media and CityFibre may be less than thrilled.

It's likely Ofcom will consult on the changes after December when they're officially announced, and we may see a repeat of the complaints lodged by rival networks.

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Reduced fibre pricing

Openreach have recently met with resellers to discuss further pricing reductions on its wholesale fibre to the premises (FTTP) product, according to the Financial Times.

The new proposal, Equinox 2, comes just one year after Openreach last reduced their pricing under Equinox 1, which focused on cheaper full fibre prices guaranteed for up to ten years, on the basis that resellers directed new customers to full fibre products where available, aiding the migration away from the copper phone line network.

According to the Financial Times, Openreach are now further planning to reduce the basic network access cost for resellers, decrease the revenue share Openreach receives per customer, and cut the amount they charge for migrating customers from copper to fibre lines by between £30 and £37.

Equinox 2 could be announced officially as soon as December, although as with their previous pricing reductions, the plans will be consulted on first and require Ofcom approval before they can come into effect, which is planned for the beginning of April 2023.

Consumer benefit

Overall, these pricing reductions are likely to benefit consumers the most with the pricing of full fibre becoming more competitive.

One major benefit of the changes we're seeing to the broadband market, with an increase in independent networks and a wider range of wholesale providers, is that pricing is no longer entirely controlled by Openreach.

Where Openreach have been the incumbent provider, owning all of the copper telephone network outside of Hull, they now face fierce competition from rivals including Virgin Media, CityFibre, Hyperoptic, Community Fibre, Gigaclear, and many other independent networks.

Vodafone and TalkTalk for example both resell full fibre broadband products on both the Openreach FTTP and CityFibre networks. And for those customers in a CityFibre enabled area, TalkTalk pricing on equivalent products is often cheaper.

TalkTalk Full Fibre 900 for example, costs £49 per month in an Openreach FTTP enabled area, yet it currently costs just £36 for customers who live in a CityFibre area.

We've also seen an increase in the number of budget broadband providers selling full fibre products for the first time too. Plusnet, who is owned by BT, launched their full fibre deals in August 2022, with their cheapest plans costing between £25 and £30 per month.

Yet, the cheapest full fibre broadband packages are still offered primarily by independent networks, with Community Fibre offering 150Mb speeds for just £17.99 per month, and Hyperoptic's 1Gb plan currently costing just £25.

In contrast, these speeds from even a budget Openreach FTTP reseller, only go down as low as £25 to £30 for 100Mb, and the cheapest gigabit broadband on Openreach's network would cost a new customer from £43 per month from the cheapest reseller.

While rival networks are likely to raise complaints in Ofcom's consultation stage, as they did last time, these further price reductions from Openreach will help to make their resellers more competitive for full fibre products.

Social broadband

The revelation of this meeting between Openreach and their largest resellers comes shortly after Vodafone repeated a request for Openreach to reduce the cost of wholesale pricing to enable resellers to offer more affordable social broadband tariffs.

Labour also recently launched its manifesto for the next General Election, including a pledge to introduce a nationwide social broadband tariff, and stating if providers were unable to agree a pricing structure between themselves, the then Government would step in to enforce a regulatory price instead.

While the proposed pricing changes seen by the Financial Times don't mention a wholesale social tariff, it will be interesting to see if Openreach eventually buckle to the pressure to help their resellers provide the more affordable social tariffs being requested by Ofcom.

However, Ofcom themselves may have made this more difficult due to the new rules they announced back in March 2021 to help stimulate the rollout of the full fibre network. At the time, they removed regulation to hold down the cost of cheaper superfast fibre to the cabinet (FTTC) packages, to help prompt customers to switch to full fibre deals. Yet, it's these superfast FTTC plans which are primarily seen in social tariffs owing both to their lower cost, as well as to their wider availability.