Ofcom orders BT to cut prices and speed up installation times

BT to create 1,600 engineering jobs...Embargoed to 0001 Monday May 19 File photo dated 10/05/06 of a BT engineer at work as the communications giant is to create 1,600 engineering jobs amid moves to improve customer service and install lines and fix faults more quickly. PRESS ASSOCIATION Photo. Issue date: Monday May 19, 2014. The firm's Openreach business said it expected a significant number of the new jobs to be filled by ex-servicemen and women. The company stressed it was keen to take on more women engineers. See PA story INDUSTRY BT. Photo credit should read: Andrew Milligan/PA Wire©PA

BT must cut costs and speed up broadband installation times under plans from the UK telecoms regulator published on Tuesday

Ofcom said BT had to provide better services for the dedicated high-speed data lines needed by businesses as well as schools, shopping centres and large housing developments.

Strict rules will be imposed by the regulator to improve BT’s performance in installing and fixing high-speed business lines on behalf of its rivals. Ofcom said that competition would increase in the £2bn market for high bandwidth leased lines as a result.

Jonathan Oxley, Ofcom competition group director, said: “All of us depend on high-speed, fibre optic lines. Businesses use them to communicate, and they also underpin the broadband and mobile services used by consumers at home and on the move.

“BT is relied on by many companies to install these lines and its performance has not been acceptable. These new rules will mean companies across the UK benefit from faster installation times, greater certainty about installation dates and fast repairs if things go wrong.”

Companies such as Vodafone, TalkTalk and Sky will pay less to use the BT network under wholesale rates, which could mean lower prices for customers if the savings are passed on. Most business lines are owned and maintained on behalf of competing providers by BT.

Rivals will also be able to offer broadband services using so-called “dark fibre” — lines not managed by BT on which they can use their own equipment rather than pay BT extra to activate connections.

These new rules will mean companies across the UK benefit from faster installation times, greater certainty about installation dates, and fast repairs if things go wrong

- Ofcom’s Jonathan Oxley

BT’s competitors have long called for better access to the national telecoms network given the long delays they can face when requesting the installation or repair of lines to their business customers by BT Openreach.

Companies such as Sky have called for the formal separation of BT’s infrastructure division, which is still a possibility even if Ofcom has agreed to first consider other options to bring greater independence to Openreach.

The move to free the business broadband market is the latest attempt by Ofcom chief executive Sharon White to bring greater competition to a wholesale telecoms market dominated by BT, which owns the country’s former monopoly infrastructure.

Businesses often complain about the wait for new broadband lines or the repair of faults, even as the supply of high speed, reliable internet connections has become increasingly essential.

Openreach has signed up to a tight set of targets to help reduce these complaints.

Ofcom has also separately proposed that BT should open up the poles and ducts that access its network to rivals so that they can run their own high-speed fibre lines around the UK.

Ofcom said that Openreach was taking too long to install leased lines, while it was failing to complete one in four leased line installations on the initial date promised to customers. 

Since 2011, the average time between order and delivery has increased from 40 to 48 working days, according to Ofcom. It wants BT to reduce this to 46 working days by the end of March 2017 and then lower again to 40 working days the following year. Four-fifths of the leased line orders must be provided by the date promised to customers in 2017.

Ofcom also said that Openreach must fix at least 94 per cent of faults on its leased line network within five hours.

Prices will be cut for BT’s ethernet services with bandwidths up to 1 gigabyte by an initial 12 per cent, while those for traditional services with bandwidths up to 8 megabytes will fall 9 per cent.

The new rules still need approval by the European Commission and further negotiations with BT and the industry over exact pricing, but are expected to come into effect next year.

Ed Vaizey, digital minister, also said he wanted telecoms groups to separate the cost of landline rental from broadband packages to make it clearer what customers are paying for.

Broadband advertising often shows just the cost of the internet connection, leaving the line rental fees to the small print. Mr Vaizey hopes this could lead to customers paying only for services that they use, although homes will always need a landline connection for broadband. Telecoms groups have been asked to come to a meeting with Mr Vaizey to discuss the idea.

By lunchtime on Tuesday, BT shares were down more than 1 per cent at £.4.44

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