Regulator looks to slash costs of changing provider.
In its Fixed Access Market Review 2014 report, the regulator laid out its intention to slash the fees certain ISPs have to pay to infrastructure provider BT Openreach, which supplies FTTC (fibre to the cabinet) capabilities to around 2.7m homes across the world.
Currently, companies have to pay a £50 fee when a new customer joins, but Ofcom has recommended lowering this to £11, a move it says will allows providers to offer lower retail start-up fees.
Openreach currently supplies connections to all UK national ISPs except Virgin Media.
The change could mean that ISPs absorb the new £11 charge into their monthly subscription fees, or include it as a one-off payment at the start of a contract. It may also lead to ISPs introducing shorter contracts in order to keep their customers from switching provider.
However, Ofcom has stopped short of capping wholesale access prices for Openreach’s fibre network, which had been requested by TalkTalk.
"[Ofcom] believes the price of fibre broadband is currently constrained by the availability of standard broadband services, and by competition from Virgin Media’s cable network," the regulator said.
However, it did say that it would soon propose new guidance on its future approach to the ‘margin’ that BT sets between its wholesale and retail fibre prices.
BT praised the decision, saying it a statement that it was "pleased that Ofcom has acknowledged the success of the current regulatory framework by maintaining pricing freedom for Openreach’s fibre products.
"The UK boasts one of the most competitive markets in the world with around 140 CPs selling fibre via our open wholesale network, whilst more than 3.2 million households also take superfast broadband from Virgin Media."
Ofcom’s review also proposed new wholesale price regulations for standard broadband and telephony, including a lowering of costs for shared unbundled lines, where BT provides the voice connection but the ISP provides the broadband connection. It recommends lowering the wholesale cost from £9.89 per year to £5.54 per year on 1 July, followed by 33.4% below the consumer price index (CPI) measure of inflation every year from 2015 to 2017.