TalkTalk and think tank SM Research say businesses and consumers face higher broadband bills in six months’ time unless Ofcom reviews regulation on Openreach.
Openreach’s dominant market position – the majority of the UK’s broadband services are powered by its infrastructure – mean its services and activities are subject to price caps and regulatory measures.
If wholesale prices rise, then partners will have to increase the prices they charge their customers if they want to maintain margins.
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Openreach regulation
TalkTalk argues the decision to allow Openreach to increase wholesale prices by inflation rather than cost fails to protect households who are increasingly reliant on their connection since lockdown and could threaten the UK’s post-Coronavirus economic recovery.
It suggests the bill for a typical British business could rise by £2,000 over five years – an increase of 11% – while a mid-sized hospital could witness an increase of £8,000, a 7% rise over the same period. Overall, it is estimated the overall cost will be £10 million to hospitals and £500 million to businesses.
The decision to focus on hospitals given their role in the fight against Coronavirus and the timing of the announcement to coincide with the Conservative Part’s virtual conference is a deliberate attempt to force the government into action.
TalkTalk wants the government and Ofcom to reconsider an “uncompetitive system that has made these prices possible” and “carry out affordability assessments that reflect tough new economic circumstances since Covid.”
It also believes Openreach should face scrutiny for failing to keep promises on competition and to offer affordable prices to customers and has cast further doubt on the company’s ability to fulfil the government’s fibre rollout targets.
“When the Prime Minister promised this time last year gigabit connectivity for everyone by 2025, we were front of the queue to applaud him,” declared Tristia Harrison, TalkTalk CEO.
“The problem is this target is in serious danger of being missed. Investment into Britain’s full fibre rollout is critical. But it’s got to be affordable – people cannot be forced to pay higher prices just to increase the profits for those building the network.
“So TalkTalk is asking the Government and Ofcom to make sure that competition thrives and that prices are fair for hard-pressed Britons. It cannot be right that hospitals will end up paying thousands of pounds more for their broadband when economic times are tough.”
An Openreach spokesperson said: “We've launched a number of recent offers for our new, ultra-reliable, full fibre broadband network - and we're encouraged to see those generating strong demand from major ISPs across the market.
"We intend to build the highest quality network, with the biggest footprint in the UK and we'll continue to work closely with our customers to develop propositions that work for them whilst safeguarding competition in the market. We have a legal obligation to treat all of our customers equally and we take that obligation very seriously. That means our full fibre products will always be available to every ISP in the UK under the same prices terms and conditions."
Ofcom has been contacted for comment.
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