Plans to ensure quality of service in repairs and installations
20 May 2014 10:56 AM
- New rules to underpin
Openreach performance on repairs and installations
- Separate measures to
promote competition in superfast broadband
- Lower wholesale charges
for standard broadband and phone calls
Telephone and broadband
customers can expect improved line repairs and installations, under draft
decisions which Ofcom has notified to the European Commission.
Under the changes, the vast
majority of phone and broadband faults would have to be repaired within two
working days, while most customers wanting a new line must receive an
appointment within 12 working days.
These targets are expected to
apply from this summer and are set out in new minimum performance standards for
Openreach, the company that installs and maintains connections to BT’s
network on behalf of competing providers.
Should Openreach fail to meet
the new targets, it would face sanctions from Ofcom, which could include
fines.
New performance
targets
The new targets are designed to
ensure better service for telephone and broadband customers in future. Ofcom
will monitor Openreach’s performance closely and intervene further if
required.
Under the draft measures,
Openreach must in future:
- complete around 80% of fault
repairs within one to two working days of being notified;
- provide an appointment for
around 80% of new line installations within 12 working days of being
notified;
- report publicly on its
performance, which will allow Ofcom to monitor and intervene further if
required; and
- make clear the timeframe in
which it is currently completing any remaining jobs, to provide reassurance to
consumers about how long the work is likely to take.
The targets escalate over three
years, reaching their full level in April 2016.
Separately, Ofcom will also
review the standards of redress, which could include compensation, that
landline and broadband providers offer to consumers when things go
wrong.
Boosting superfast
broadband competition
Today’s draft statement is
part of Ofcom’s Fixed Access Market Reviews, a wide-ranging set of
decisions in the wholesale telecoms markets used by companies to offer
telephone and broadband services to UK consumers. Different broadband providers
sell superfast services over BT’s network. There are now around 2.7m such
connections in the UK.
Currently, if a consumer wishes
to change superfast broadband provider, the company they are switching to must
pay a £50 fee to Openreach – which is often passed on to the
customer. Ofcom intends to cut this wholesale fee to £11, which would
allow providers to offer lower retail start-up fees.
Also, where an existing
superfast customer switches to a different supplier, the minimum length of the
wholesale contract between BT and the new supplier would reduce from a year to
one month. This gives flexibility for telecoms providers to offer shorter
retail contracts.
Ofcom is not intending to set
the level of wholesale prices for Openreach’s fibre service, as it
believes the price of fibre broadband is currently constrained by the
availability of standard broadband services, and by competition from Virgin
Media’s cable network. Ofcom will soon propose new guidance on its future
approach to the ‘margin’ that BT sets between its wholesale and
retail fibre prices.
Prices for traditional
services
Ofcom has also today notified
draft controls on the prices that Openreach can charge other telecoms providers
for some of its standard broadband, wholesale services.
These ‘charge
controls’ make reference to the consumer price index (CPI) measure of
inflation, an approach which incentivises Openreach to become more efficient.
They can bring about price cuts where providers pass on savings to retail
customers.
The charge controls would come
into effect on 1 July 2014 and run until 31 March 2017. They cover wholesale
charges for telephone and standard broadband services delivered to homes and
businesses over Openreach’s copper network in three
ways:
- A ‘shared
unbundled’ line to a property. This allows telecoms providers to
provide broadband services to their customers by installing their own equipment
in Openreach’s telephone exchanges, while BT provides the voice
connection. In March 2014, the wholesale cost for this service was £9.89
per year. Ofcom intends to set a cap on this charge, reducing it to £5.54
from 1 July and then in real terms by
CPI -33.4% each year from March 2015 to 2017;
- A ‘fully
unbundled’ line to a property. Again, the telecoms provider uses
its own equipment in the exchange, but this time it takes full control of the
line to offer both broadband and voice. In March 2014, the wholesale cost for
this service was £83.92 per year. Ofcom intends to allow this to increase
slightly in real terms to £86.10 from 1 July, and then by CPI +0.3% each
year from March 2015 to 2017; and
- Wholesale line
rental, which is used by communications companies to offer voice
telephone services to consumers using lines rented from Openreach. In March
2014, this cost £93.32 per year. Ofcom intends for this to fall to
£91.04 from 1 July, and then in real terms by CPI -3.0% each year from
March 2015 to 2017.
All of today’s draft decisions are subject to review by the European
Commission, following which Ofcom expects to publish final statements in
June.
Further
work
Ofcom conducts these reviews
every three years under the European telecoms framework. In the UK, there are
also legally-binding undertakings that were agreed between Ofcom and BT in
2005. These resulted in the ‘functional separation’ of BT and the
creation of Openreach to provide access for competitors to the telecoms
network. This combination of regulation has resulted in strong competition in
the supply of broadband and telephone services, which has benefited
consumers.
As next year is the tenth
anniversary of the undertakings with BT, Ofcom anticipates that this will
provide a sensible opportunity to take stock of their effectiveness in light of
general market developments.
NOTES FOR
EDITORS
- Openreach targets will be
adjusted slightly to deal with instances where external factors beyond
Openreach’s reasonable control (such as extreme weather) mean it is not
possible to meet the service standard. The targets will allow that up to 3% of
repairs and 1% of installations in a typical year might be delayed due to such
factors.
- Around 25-30% of new line orders
typically require an engineer visit. The new target of 12 working days would
apply to these jobs. Installations not requiring a visit are almost always
completed within two working days.
- The draft targets apply to the
two main Openreach services, which allow competing providers to access
BT’s network: wholesale line rental and fully unbundled lines. The
targets will not apply to other products – such as fibre broadband, where
BT has generally met or exceeded its service level agreements. However, Ofcom
may set targets for other services in future if performance were to become a
concern.
- Ofcom has today also notified
its Wholesale Broadband Access review to the European
Commission, which looks at competition in the market for wholesale broadband
products that telecoms operators provide to themselves and sell to each other.
The review finds that the area of the UK that benefits from effective
competition (three or more providers) has grown in the last three years from
78% to 90%.
- Under the revised European
Framework that was transposed into UK law in May 2011, Ofcom is required to
submit certain regulatory proposals to the European Commission for their
review. The European Commission has one month to review the draft decision,
during which it can comment or initiate further examination. The Body of
European Regulators for Electronic Communications (BEREC) and other equivalent
EU Member State national regulatory authorities also have the opportunity to
comment during this one month period.