Openreach plans to cut broadband costs to speed up switch to faster fibre
BT networking division Openreach is planning to cut the costs of wholesale broadband for the second time in 18 months as it looks to become more competitive and attract new clients.
Openreach says that the new proposal, called ‘Equinox 2’, will enable more customers to switch from slower copper connections to faster full fibre in the coming years.
The company, which is owned by BT Group, believes that cutting prices will also entice its biggest clients, which include TalkTalk and Sky, to renew its wholesale contracts.
Openreach generates most of its revenue from wholesaling broadband to other providers, but the recent surge in rivals looking to lay fibre could jeopardise its dominant position in the industry.
A competitor who recently met Openreach for talks about the potential pricing changes believes that the rivals, dubbed ‘AltNets’, are the “biggest competitive threat in its history”.
Equinox 2 would be the second time that Openreach has cut costs after it first did so in the summer of last year.
Its main rival, Virgin, which recently merged with O2, tried to block that move after claiming that it was uncompetitive as it aimed primarily to lock in clients.
However, that challenge was unsuccessful and Openreach is now planning another tweak to its pricing structure.
The plans would enable clients such as Sky to earn a greater share of revenue per customer and pay less to migrate customers to faster-fibre connections.
Openreach is set to formally announce the changes in December ahead of a planned start date in April.
The news follows a TalkTalk report published last month that showed that 25% of broadband customers in the UK will still be connected to legacy copper networks in 2030 due to a reticence to switch providers amid the growing costs for services.