Ofcom has imposed new restrictions and charge cuts on BT and Openreach causing share prices to fall 2%.
BT and Openreach broadband customers could expect lower rates in future as the company may be forced to cut prices, again.
The newest proposals from Ofcom, designed to create a fairer marketplace, could see BT broadband charges for rivals cut by as much as £100 million.
The changes would predominantly affect the BT owned Openreach, the company in charge of the UK’s broadband infrastructure, by reducing wholesale charges from £88.80 per year to £52.77 by 2020, a 40% reduction. The news has caused BT shares to fall by 2% in early trading.
Jonathan Oxley, Ofcom’s Competition Group Director, said: “Our plans are designed to encourage long-term investment in future ultra fast, full-fibre networks, while promoting competition and protecting consumers from high prices.”
“People need reliable phone and broadband services more than ever. We’re making sure the market is delivering the best possible services for homes and business across the UK.”
In the UK there are currently between 2.4 million and 3 million broadband customers who do not use BT but who still utilise the 40mb superfast broadband Openreach service used by BT rivals such as Sky and TalkTalk.
Ofcom is also hoping to improve the standard of UK broadband by imposing further restrictions on Openreach including 95% of connections must be installed on the date agreed, 90% of appointments must be approved within 10 days, and 93% of repairs must be made in two days.
Andrew Ferguson, editor of thinkbroadband.com, said: “The proposal by Ofcom to start regulating the Openreach VDSL2 portfolio will be welcomed by many, since a £2 price decrease in 2018 will come at a time when far too many bills are still creeping up while wages aren’t keeping pace.”
“Though there is a high chance rises in other costs for suppliers may erode the price cut – for example, as we stream more TV, the cost of providing the service increases.”
Earlier this month, Ofcom fined BT and Openreach a record £42 million for failing to provide adequate repairs and has threatened more fines in future if standards are not kept to.