BT has lowered the price it will charge rival service providers to access its ducting and telegraph poles
The possibility of solving the UK’s broadband crisis in rural areas moved a step closer today when BT published its revised prices for access to its poles and ducting.
BT Openreach said it has issued revised prices for pole and duct access (PIA), as well as breaking down many of those products into their component parts.
It said both moves will assist other companies who are keen to use such infrastructure to deliver fibre broadband to rural areas.
According to BT, the new prices are significantly lower – in some cases more than 60 percent lower – than the draft ones issued in January when it said there was a limited understanding of the costs and challenges incurred with providing such access.
For example, BT said the price it will charge for accessing its telegraph poles (mostly found in semi rural and rural areas) has dropped from £21 per pole to around £11, while duct access has been cut from £1.16 to as low as 44p per metre per year, based on the number of cables the duct can carry.
BT said the lower prices reflect an improved understanding of the relevant costs – gained through trials which are ongoing – as well as detailed discussions with Ofcom over which of those costs, and how much of them, Openreach is allowed to recover from PIA.
“Openreach believes the new prices are fair, strictly cost-orientated and in line with Ofcom guidance,” it said.
As well as revising the prices, Openreach has broken down some products into their component parts. This will allow Communications Providers (CPs) to “pick and mix” which services they buy from Openreach and which they deliver themselves. As a result, CPs will enjoy greater flexibility and choice.
“I’m pleased to be able to bring down these prices,” said Openreach chief executive Liv Garfield. “A lot of hard work has gone into revising them and we have ended up with prices that are up to 38 percent below the European average. Other companies now have the certainty and low prices they need to build a business case and bid for BDUK funds.”
“No-one is keener than myself to bring superfast broadband to rural areas but it is an enormous challenge,” she added. “These prices will hopefully unlock some much needed investment from others but we will have to wait and see. Openreach has largely bankrolled Broadband Britain by getting fibre to more than five million homes but it’s time for others to help us with the heavy lifting.”
The PIA access issue has proved a vexing one for BT, Ofcom and the ISP industry. Ofcom reached an agreement with BT in February 2010 to allow rival ISPs to access its ducting and poles so they could install their own lines.
Then in January this year BT revealed the price it would charge for access its telegraph poles and ducting. But the rival ISPs felt these prices were too high and threatened to boycott the government’s £830m investment in rural broadband pilots.
With no signs of compromise between the two sides, Ofcom warned in the summer that it may have to step in and regulate the prices BT charges.
But it remains to be seen what the rival ISPs make of these new PIA prices.
However independent telecoms analyst group seems to believe that BT has got it right. It said that it has recently completed a study that has benchmarked the pricing of duct and pole access across a set of key European countries with a similar offering.
When using Openreach’s October 2011 pricing, Ovum’s benchmark apparently suggests that overall the UK is up to 21 percent below the European average in urban areas. Crucially, in the more rural areas, the UK is as much as 38 percent below average when considering pricing in France, Portugal and Spain.
“The importance of a successful physical infrastructure access (PIA) product in these areas cannot be underestimated as the UK government has committed to having ‘the best super-fast broadband in Europe by 2015’” said Ovum’s regulation practice leader Matthew Howett.
Across a range of scenarios and allowing for a mix of assumptions, the UK is consistently below the EU average; in some instances by up to 40 percent, it said.