Openreach deal cuts wholesale price of superfast broadband by 40pc

WHOLESALE prices for “superfast” broadband packages will come down by as much as to 40pc in a deal between BT’S network company Openreach and retailers such as Sky and Talktalk.

Broadband providers did not say how much of the wholesale price cuts will be passed onto consumers.

However the agreement is designed to stimulate demand for faster services on the existing Openreach infrastructure as it prepares to replace millions of copper telephone lines with ultra-fast fibre optics over the next decade.

Only about 10m out of 28m homes connected to the network pay for superfast packages, which use fibre optics as far as streetside cabinets. The rest rely on ageing copper infrastructure all the way to the local exchange. Openreach was forced to cut prices by Ofcom, which found that the former state monopoly had been making too much money for BT. Its new deal with retailers goes further than the regulator demanded however, by bringing in discounts earlier.

Wholesale prices of top tier 80 megabits per second superfast broadband are also to be cut. Ofcom had only targeted Openreach’s 40 megabits per second service. For Sky and Talktalk the price cuts offer short-term cost savings but commit them to shift millions of their subscribers to superfast packages within at most five years. Over time it will mean higher revenue and profit margins for Openreach, analysts said. BT shares closed up 0.74pc.

Tristia Harrison, chief executive of Talktalk, said: “The agreement should support alternative network investment, including our plans to build a full fibre network to over 3m homes.”

If Talktalk’s plan to build its own network goes ahead it will be able to move customers off the Openreach infrastructure without a penalty.

However it warned investors that delivering on its commitments to shift subscribers to superfast packages will mean higher costs. The company’s shares were down slightly on the news. debate on airport expansion, the Government won a key Commons vote last month after Chris Grayling, the Transport Secretary, supported the development of a third runway at the west London airport.

“People had always talked about Heathrow expansion being ‘the right answer’ but politically impossible. Well, MPS have now shown it is absolutely the will of Parliament that we get on and expand,” said Mr Holland-kaye.

Despite winning the Commons vote by 415 votes to 119, the Government’s decision remains subject to legal challenges – one of which has the backing of London Mayor Sadiq Khan.

Meanwhile, Heathrow’s departure punctuality fell in 2018 to 79.9pc from 83.2pc. This was in part as a result of March’s inclement weather.

However, Mr Holland-kaye added: “There is no question that our punctuality would be significantly higher were it not for the strikes in France and the lack of capacity among air traffic controllers by Eurocontrol. We need our European partners to step up.”