Ofcom eases BT price controls in bid to kick-start investment

TELECOMS watchdogs have eased price controls on BT’S broadband network Openreach to encourage more investment in upgrades to faster and more reliable fibre-optic lines.

Ofcom says the monthly wholesale charge for a basic 40 megabits per second broadband package on its existing copper network will be reduced gradually to hit £11.92 in 2021.

The decision represents a partial reprieve for Openreach, which had been in line for a stricter £11.23 price control.

It means BT’S rivals including Sky and Talktalk, which rely on wholesale access to the Openreach network, face higher charges than previously proposed, with the change likely to be passed on to consumers.

BT estimates the new charge controls will cut Openreach profits by as much as £120m next year.

It also says it may have to voluntarily cut the prices of faster broadband packages to encourage Sky and Talktalk to upgrade customers, threatening a further blow to returns.

However, it says Ofcom’s announcement will provide certainty on pricing for the next three years. BT shares were up 5pc at 244.05p.

The regulator has backed off amid complaints from BT that it has not been allowed to make a fair return on earlier broadband infrastructure investments.