TalkTalk Considers Legal Action to Stop Openreach Price Rises
Budget UK phone and broadband ISP TalkTalk has reportedly approached Sky Broadband and Vodafone about the possibility of combining forces in a legal challenge to halt a key change in Ofcom’s Wholesale Fixed Telecoms Market Review 2021-26 (FTMR), which could result in Openreach (BT) charging higher wholesale prices.
The regulator’s FTMR – see our summary – is currently attempting to improve the business case for operators’ that are investing in the rollout of gigabit-capable “full fibre” networks. At present the biggest of those is Openreach, which has pledged via BT Group to invest £12bn in order to ensure that their new Fibre-to-the-Premises (FTTP) lines can reach 20 million UK homes by the mid to late 2020s (i.e. 2025 – 2030).
As part of this Ofcom is intending to move away from cost-based charge controls on copper services, such as fully unbundled lines (MPF) and FTTC (i.e. encouraging ISPs like Sky Broadband and TalkTalk to go fibre), which will increase by inflation (CPI). Meanwhile, for the hardest to reach premises (e.g. rural), they will allow Openreach to spread the cost of investment in fibre across a wider group of consumers (e.g. allowing them to recover some investment costs from both copper and fibre products).
However, this means ISPs that have previously invested a lot in their copper services, such as TalkTalk, Sky Broadband and Vodafone, may be forced to stomach bigger price increases at the wholesale level and that in turn will have to be passed on to their broadband customers (not something any provider enjoys having to do).
TalkTalk has previously warned that “this proposal would lead to consumers’ broadband bills being about £900m higher over the charge control period compared to cost-based prices,” while a separate study from Vodafone suggests that the extra cost impact could hit £3.2bn for the 2021 to 2026 period in total.
According to the Sunday Times (paywall), TalkTalk is now mulling over the possibility of taking legal action to stop or change Ofcom’s proposal and they’ve called on Sky and Vodafone to join. The newspaper claims that Vodafone has already declined the proposal, while Sky are said to be considering it.
Meanwhile the regulator, which has the incredibly difficult job of having to balance all these competing considerations (each side has its own vested interests and inevitably will always be winners and losers), remains adamant that Openreach deserves the chance to make a “fair return,” particularly given the huge private investment they’re intending to make (BT’s plan to invest £12bn is partly based on Ofcom’s direction in this review).
At the same time, we shouldn’t forget that Openreach is facing rising competition from alternative FTTP networks, many of which have adopted aggressive pricing in the hope of peeling away some of the incumbents base as they rollout. Suffice to say that Openreach may soon be able to gain a greater return via existing products, but today’s market for full fibre is much more competitive than the copper-centric one that existed ten years ago.
As it stands TalkTalk may well wait to see Ofcom’s final decision, which is due before March next year, before deciding whether to launch a legal appeal against the changes.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and Linkedin.
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Investing in services delivered over copper but selling them to the public as ‘fibre’ was never going to end well. Might even be the next PPI scandal.
My thoughts too.
be very surprised as it has been agreed that was fibre broadband all the way down the line since FTTC was launched and has been universally accepted that it was fibre broadband
I agree biggest con ever I often get people saying they are on fibre too when I talk about my true fttp install and then get confused when I explain they don’t have real fibre
I agree for ANY internet service to be sold as fibre it should be delivered to your home on fibre.
Just having part of the network fibre does not make it s fibre service.
This also applies to virgin which while much faster still has to rely on copper (coax).
Every fibre broadband service has elements of copper, even FTTP, the difference is how much. That ethernet cable is still copper.
@Maek.
If memory serves, Virgin first described their docsis service as fibre – lots of adverts with Dawn French extolling the virtues of it. A complaint was made, the ASA got involved and the ruling was that it was allowable. Once that happened all the ISPs riding Openreach’s network jumped on board and starting calling VDSL based services fibre too.
I too have lost count at the number of puzzled faces and the disbelief when I explain to people their fibre broadband (FTTC) isn’t fibre but still plain old telephone cable. It will come back to bite these ISPs as it will be an uphill battle getting people to migrate to FTTP as they will see the marketing about fibre direct to their home and just ignore it thinking that is what they already have.
Had a client a few years ago with their cabinet at the end of their driveway with the last 30ft to the house up a pole to twisted pair. They were sold “full fibre” and couldn’t understand why they only got 2Mbps.
Speaking to BT on their behalf I was informed that it was indeed full fibre, which was news to me at the time. “Seriously?” was my response.
Seems BT has still much to learn.
This practice needs to be made illegal services should only be able to be advertised as fibre if the direct fibre comes into your home otherwise you have DSL or Cable.
2Mbps over 30ft? I can’t understand that either. Shouldnt get any loss over that distance 80mpbs/10Mbps easy. Downstream
Srandard. The ISPs want the world but they dont want to pay for it.
Someone has to pay, this stuff cant be rolled out for free and in a capitalist system companies have to make money doing it.
We the tax payer paid for our area, green cabinet 10 metres across the road from the exchange, then connected hundreds of EO lines to it, I bet will pay for FTTP when or if it comes!
mark
you cabinet is funded by BDUK would have been part of a contract funded by a mix of private monies (from openreach) and public monies via a full procurement – (so comments like my tax paid for it are only correct in part and actually under gainshare migth mean the some of the monies will have been returned or reinvested
After seeing what Gigaclear charge after first 18months, OR network is dirt cheap.
£47/month after 18 months.
If they don’t get a fair return they won’t invest.
Do you want FTTP or continue to complain about the wet string?
Aren’t the government handing a much reduced cheque to get 85% covered by 2025? So is that tax payers money? So kid it comes to my area it will be Fastershire or Gigaclear, Openreach won’t bother, I suspect they’ll roll-out in profitable areas, but here in Gloucestershire some towns were deemed unprofitable, but other areas of UK with a fraction of the population were deemed profitable! It’s a strange landscape out there!
@Mark. The Government are not funding 85% coverage. Over 80% will be likely to be covered by commercial investment so don’t attribute any of that to them. Any public funds may cover the 5% still leaving 15% going nowhere.
Talktalk are talking are talking a bizarre game currently. All industry, both fixed and mobile, requires investment and therefore wholesale prices need to rise if we want the coverage OR or other.
Funny old world, innit? Talk Talk, Voda and the rest are quite happy to put their prices up every year and charge the punters more, but if they actually have to pay *their* provider more money they’re talking about legal action.
Like.
I was coming in to say the same.
Maybe if these companies actually invested in their infrastructure instead of allowing their exec’s to remove the cream from the top of the milk year after year, customers would get the quality type of broadband they pay for each month?
Well I can’t believe this going to take outreach to court when they how over million to outreach they got a dam check, let me tell you about talktalk I have had to put my case in the hands of a solicitor they say they what over £400 pounds but they have said I had two lines well when I look at my bank statement they was taking £68 every month but going back to August 2016 my monthly payments is all over the place so I this to the people they are robbing people.
This makes me laugh so much, the worst provider out there trying to team.up with other providers. Do anyone know how much they pay per year for a circuit. It works out nothing compared how much the customer pays. On top of that all the other providers who use the Openreach network don’t invest into it. All they want to do is make money and blame Openreach for not rolling out the FTTP. How about the other providers roll out there own network and watch them fail. Sky tried to and then failed. They always piggy back of somebody else’s network.
come 2020 it wont matter who controls the internet …. the way things are going we will all be limited to everything we do on the net including speeds etcc….. one day we wont be able to visit pornhub without having to give 350 bits of id.
Like
This whole CPI/RPI increase is such a scam. It goes up every year as an indication of how much things cost in the UK, not in relation to anything else.
The big companies are just taking advantage because if they increase by RPI/CPI, they themselves are contributing to the next years price increase.
The way they market it as though ‘Oh well things are getting more expensive..’ when they are the ones who are partly causing things to become more expensive.
Personally I really believe they should set prices for contracts and stick to them. If they know things are going to be more expensive than add a quid onto the price in the first place instead of increasing them year after year.
If any of these unscrupulous companies invested their annual CPI increase (which is just a good excuse to go higher so there’s no need to bother with RPI anymore) each year in their service delivery, kit, customer support or speeds, no customers would be as irk’d.
But in this instance its about the price of their BT circuits which is small change in costs, certainly compared to the increase in takings their annual CPI raids get them banked in their coffers.
Crazy idea but why doesn’t talk talk and friends band together and roll out a national competitor to openreach, maybe they could buy out virgin and expand that, they may have to add a pound or 2 onto the bills but then they’d not need to any any extra to openreach or take them to court.
Erm they did?
Joint Venture with SKY and CityFibre Holdings in York, then SKY decided it was not what they wanted and CFH and TalkTalk then expanded into York, TT then expanded the Fibrenation Build into Dewsbury, Bolton, Harrogate and Knaresborough and got snapped up by City FIbre who massively increased their network build rate.
That’s not exactly what I would call a national competitor.
In the present time where more and more activities are happening over the internet the importance of full fibre can not be emphasized.These private companies should also invest more so that people can have good internet services.
I have what they call FTTP and i am in Zone 5 London 2016 newly developed 9 household street and it is a shame that developer did not install full fibre so only option for us is openreach FTTP
My internet gets disconnected frequently and becomes very slow(though i am in ISP’s superfast 2,fastest possible)I have to frequently contact My ISP.what a waste of time and it is really frustrating.There is existing Virgin media in adjoing street but i have been calling them since i moved here in mid 2016 but they always say we do not have plan to extend service in this street.
I do not know when in London,in one of the so called developed and richest country in the world i will get fibre internet.UK does not deserved to be called a developed country.We are not Great Britain,we are living in little poor Britain.
What we need is Virgin to be made to unbundle its cable to the home infrastructure like BT were made to unbundle. This would be of far greater benefit to customers and far cheaper than rolling out expensive FTTP constantly (mostly to already well blanketed towns and cities.)
This would provide far better market competition and better alternatives to customers too.
Why not split Openreach into separate undertakings run by local authorities? Local councillors would be anxious to ensure that broadband in their area works well in order to get re-elected.
Just like they run the other services, really?
Oh my God, you really mean that! LOL!
OR are actually doing a good job. Starved of investment over the years they are finally moving forward with FTTP at a pace. FTTC was always a stop gap but at least 95% have something better for now.
If you compare the cost of their service (the hard bit) against what the ISPs charge us they are aren’t that bad. But they need headroom to invest faster than they currently can. They have no obligation to provide FTTP and could simply leave it to the Altnets.
As for the “Fibre” debate some FTTP providers use copper for the final tail in, should they also review their advertising?. The majority of VM Customers frankly don’t care and most DSL customers just want it to reliably deliver the speed purchased.
Trouble is whilst they “may be moving on with fttp” at a pace, they’re just blanketing major towns and cities already cabled to the home.
Currently yes because they need to retain market share. Its clear where they are so if an Altnet joins in to compete its hardly OR’s fault even if the Altnet starts first. OR is to big an cumbersome to change course and is following a well structured contiguous plan.
They do have a Market Town and Villages, won BDUK/WG/SG contracts and New Build. So if the market is right they will go there, but the important thing to understand is they don’t have to.
Overbuild is a stated objective of Ofcom, it could be avoided.
Buggerlugz, there’s huge amounts of rural FTTP going up, there are PONs built in Lincolnshire, Cambridgeshire and on the Fens in places you would never expect it to be.
“…and that in turn will have to be passed on to their broadband customers (not something any provider enjoys having to do).”
Really? Some seem to really enjoy and take great pleasure out of it (yes Virgin, I’m looking at you).
Those adding a percentage on top of CPI also seem to take pleasure from it – I mean, you don’t see them actively grovelling to customers and apologising about (not) having to do it, do you?
You’re forgetting that the usual exec special “pat on the back” the “Christmas party” entry in the book-keeping isn’t going to allow them the same benefits this year so the poor guys at the top need to find the cash from other sources.
@Meadmodj so I was correct in my statement about Gloucestershire? My Cotswold town I live in had no Openreach investment, so FTTP won’t be paid for by them if it comes to will Fastershire at tax payers expense or something else. It seemed to be more than 5% of Gloucestershires population without, even Cheltenham and Gloucester weren’t completed by Openreach, leaving probably leaving more FTTP to do now than has been deployed so far.
mark
no one invested commercially in your exchnage i assume – and under procurement Fastershire chose providerd (which i assume is gigaclear) any one who one that contract would have invested substantial monies (as BDUK contracts are match funded) as did Openreach in First Contract in Fastershire. Snidey comments about openreach and lack of investment indicate do you not understand how these procurement work – whih is why openreach not be investing in an area already being covered by Governement funding – you will just have to sit and wait to see if and when or what fastershire delivers you (assuming you are actually in build for them . that wilol have nothing to do with the 2025 numbers which are an aspiration
FTTP open to any commercial company. OR implemented FTTC where viable. Fastershire engaged OR for Area 3A-B (Cheltenham and Gloucester) and area 3B (Hereford). Gigaclear got the rest and put in FTTP.
We will have to await what areas Ofcom propose to tender the Government subsidy. OR may add the main towns later to FF but may decline rural because of Gigaclear. The issue will be for those on poor FTTC which may be left out by either commercial or subsidised rollout.
The Government’s revised £1.2Bn will not go far across the UK.
“and that in turn will have to be passed on to their broadband customers (not something any provider enjoys having to do)”
@mark – why does it HAVE to be passed on to their customers? That’s a pretty massive assumption and let off for the ISPs.
FTTP is far more reliable, so ISPs will actually make savings on the costs of serving their customers. It’s not a like-for-like product. And nobody’s holding a gun to their heads saying they must charge their customers more!
@Fastman. what you say isn’t 100% correct. Many towns here in Gloucestershire Openreach have done the town centre and a few suburbs, then Fastershire have carried in with FTTC for the other bits of the towns, Stoud for example is a mis mash of cabinets at Chalford,Brimbscombe etc.at the northern end even Gigaclear has ventured into the area.
In the present time where more and more activities are happening over the internet the importance of full fibre can not be emphasized.These private companies should also invest more so that people can have good internet services.
I have what they call FTTP and i am in Zone 5 London 2016 newly developed 9 household street and it is a shame that developer did not install full fibre so only option for us is openreach FTTP
My internet gets disconnected frequently and becomes very slow(though i am in ISP’s superfast 2,fastest possible)I have to frequently contact My ISP.what a waste of time and it is really frustrating.There is existing Virgin media in adjoing street but i have been calling them since i moved here in mid 2016 but they always say we do not have plan to extend service in this street.
I do not know when in London,in one of the so called developed and richest country in the world i will get fibre internet.UK does not deserved to be called a developed country.We are not Great Britain,we are living in little poor Britain.