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UK's copper broadband prices won't be forced down after EC decision

The European Commission says there is no evidence that bringing down the wholesale prices for access to BT and other European incumbents' copper networks will stimulate investment in super-fast fibre broadband
Written by David Meyer, Contributor

The wholesale price of non-fibre broadband in the UK and other EU countries will not be forced down by the European Commission, as had been previously proposed.

The decision by digital agenda commissioner Neelie Kroes means BT will not have to lower the prices it charges smaller ISPs for using its legacy copper network. Kroes, who had previously been considering calls for the prices to be brought down, said on Thursday that there was no evidence that doing so would spur incumbent operators to invest more in their fibre networks.

The Commission also decided to give incumbents such as BT freedom in setting the access prices for their fibre networks, as long as they charge the same for rivals as they do for their own retail arms.

Alternative providers had complained that incumbents charge too much for copper network access, given the fact that these older networks have already been paid for. Some had also suggested that lowering copper broadband prices would encourage investment in fibre as a replacement moneyspinner. However, incumbents such as BT argued that the resulting lower retail prices for copper-based broadband would have had the opposite effect, by making their new, high-speed fibre services a harder sell.

In a consultation that began last October, the Commission proposed forcing copper prices down gradually. However, on Thursday Kroes said she had abandoned this approach, saying it remained unclear whether lower copper prices would lead to more next-generation access (NGA) investment.

"After examining all the evidence, and given the significant competitive relationship between copper and NGA networks, we are not convinced that a phased decrease in copper prices would spur NGA investment," Kroes said in a policy statement. "Indeed, we now see fibre investment progressing relatively well in some member states where copper prices are around or above the EU average."

Kroes also noted that national regulators, of which the UK's Ofcom is one, had been "concerned that an approach linking the copper price to NGA investment commitments would be difficult to enforce in practice, and open to gaming".

"Over time, consumers will come to place greater value on what they can get from NGA networks: then copper prices should adapt on the basis that 'you pay for what you get'," she added.

What Kroes did propose on Thursday was that, when it comes to network access, incumbent operators should give rival operators the same deal as that given to their own retail operations — this is the sort of thing BT already has to do, since regulators forced it to split its network (Openreach) and retail businesses. She also said she would recommend an EU-wide cost methodology for regulated network access wholesale prices.

Regarding wholesale fibre pricing, she said that "national regulators will no longer be required to apply cost-oriented price regulation in almost all circumstances".

"But the flexibility on 'next generation' pricing will depend on application of the non-discrimination rules to ensure genuine equal treatment of competitors, and on a competitive counterweight from copper-based services or other infrastructures like cable and fourth-generation wireless," she added.

BT welcomed Kroes's proposals, saying it had "long been in favour of regulatory clarity".

"BT already provides other companies with fair and equal access to its network but this is unusual in Europe," the company said. "The business case for fibre is tough and most companies are unwilling to make this long term investment so the regulatory certainty being proposed is encouraging. We hope that other parts of the Commission follow the Commissioner's lead in developing guidelines that promote investment and competition."

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