Some 12million households could face broadband price hikes later this year as suppliers look to cover the rising costs of full fibre rollout, new research has claimed.
On 1 July, Openreach raised its prices on 23 of its 26 broadband options in an attempt to force providers onto three entry-level full fibre services as it tries to hit its latest rollout targets, according to data from broadband provider Cuckoo.
As full fibre is only available to 24 per cent of UK households, this means that millions of Openreach customers not on a fibre contract could face more expensive services.
However, Openreach argues it is still offering good value for money – and that providers ultimately set their own prices.
Openreach has been accused of upping its prices to force providers onto full fibre by Cuckoo
What has changed?
Openreach has increased the prices of all of the old copper wiring rental charges, known as FTTC (Fibre-To-The-Cabinet) which is currently used by the majority of UK households.
It then reduced the cost of the entry-level speed of full fibre, known as FTTP (Fibre-To-The-Premises) which is currently only available to 24.3 per cent of UK households.
Cuckoo say the aim of this price increase is to encourage broadband providers to consider switching from older FTTC rental options to entry-level full-fibre alternatives.
What is FTTP and FTTC?
FTTP: Fibre-to-the-premises is a broadband connection used by ISPs that uses fibre optic cables directly connected to the user’s home.
FTTC: Fibre-to-the-cabinet, meanwhile, uses a full fibre optic connection from the provider to the cabinets, which are usually located in the street, and copper wire from the cabinet to the user’s home.
It argues the attempt to incentivise providers to switch onto full-fibre could hit the customer hardest as those that don’t already receive their internet through entry-level full fibre could see their prices increase.
This includes those that don’t have a choice as FTTP is not yet available in their area.
It added Openreach has failed to meet many of its targets including in 2009, when BT, which was still attached to Openreach, committed to make FTTP available to 2.5million UK premises by 2012.
However, the telecomms giant abandoned these plans in 2013 and two years later only 250,000 homes had been connected to full fibre broadband.
Openreach has argued their prices remain competitive and prices are set by providers
As a result, following the change in Openreach prices announced in March, multiple major internet providers have increased the prices of their services.
TalkTalk has hiked prices by over £30 a year while Plusnet is increasing its broadband package by 5.4 per cent, which, taken together, affects almost one in five consumers.
This suggests that despite BT offering to reduce fees for service providers for some full fibre rental speeds earlier this month, millions of FTTC customers could still face more expensive tariffs.
Alexander Fitzgerald, Founder and CEO at Cuckoo, said: ‘BT bosses should be honest with shareholders about their past failings and apologise to households who are left footing the bill.
‘At a time when the pandemic has hit families across the country hard, they deserve better than bigger broadband bills through absolutely no fault of their own.’
What does Openreach say?
However, Openreach said the majority of its products and services are regulated, meaning its customers get equivalent prices, terms and conditions, no matter who buys them.
It added it is always the providers that set their own retail prices, meaning they choose whether to pass the extra cost on to customers. Openreach said for typical customers, there would be an increase of less than 12p per month in the charges made by Openreach to a provider.
The firm also said no other company is building Full Fibre broadband ‘faster, further, or at a higher quality’ than Openreach.
It believes it is well on track to reach 25million premises by December 2026 and is making the technology available to 43,000 homes and businesses every week, with more than five million homes and businesses already able to place an order.
Openreach said no other company is building Full Fibre broadband ‘at a higher quality’
Best broadband deals on the market
Below, This is Money, with the help of Decision Tech, has compiled some of the best broadband deals currently available on the market.
The best value offer at present is with Plusnet on its Unlimited Broadband package costing £18.95 a month for 18 months with no set up cost.
Those signing up will also get a £60 Plusnet Reward Card. The deal ends on 21 July so click here to sign up now.
TalkTalk is offering a cheap deal on its Fibre 65 plan costing £22 a month for 18 months.
Those signing up will also get an £80 voucher – but the deal ends on 21 July. Click here to join.
Plusnet are also offering two of the other cheapest deals on their Unlimited Fibre and Unlimited Fibre Extra plans costing £21.95 and £23.95, respectively.
Both are 18 month contracts with no set up fees ending on 4 August.
For those joining the Unlimited Fibre contract, they will get a £50 reward card but those joining the Fibre Extra plan will get a £60 reward card.