BT Group is funding FTTP build rather than just Openreach and they are funding it to the tune of £15,000,000,000.

Funnily enough, back when peeps were calling for Openreach to be split from the group the accusation was that money was being taken out of Openreach and given to Retail in order to pay for football.

Nowadays money is being taken out of Retail and given to Openreach for FTTP build and resulting sacrificing of customers from Retail is a calculated risk. Perhaps it is better to fund investment from cash flow than borrow a shed load of cash in a time of rising interest rates like other network players.

Perhaps the real winners are players like Sky and TalkTalk who can mirror the retail price rises without the access network investment and benefit from Openreach price reductions.

Edited by FibreBubble (Tue 04-Apr-23 20:23:14)

In reply to a post by SpeedyPdA:

Hi FibreBubble
The capital expenditures into infrastructure come out of their Openreach business, not consumer business. For regulatory reasons I believe the two need to be accounted as two different parts of BT group. But ultimately BT , along with TalkTalk and Sky pay Openreach for access to that and in fairness the cost of infrastructure does increase, but again if you breakdown the cost profile some of it is impacted by high inflation, most of it is not from what I can see. But to your exact words, a few bob goes here - yes.

AFAIK, 3.9% of increase is being allowed for all ISP's to cover capital expenditure on infrastructure, the remainder of increase is inflation, quite how much this affects BT I'm not sure, but most ISP's are increasing prices by around the same, the only exception I can see amongst the larger ISP's is Sky. So this is not a case of whether BT price increase is fair, but if all (except Sky) are fair.
I note that you talk of "healthy return on investment for shareholders", well go back couple of years and they didn't pay a dividend in response to C-19 and a need to invest in fibre.

community groups is one way. Making markets as competitive as possible is another good way, but I recognise that's tough when talking about something like this. But I hope the market continues to open up and become more efficient.

Hi Fibrebubble - I did not know this and i'm surprised this is allowed.

In reply to a post by SpeedyPdA:

community groups is one way. Making markets as competitive as possible is another good way, but I recognise that's tough when talking about something like this. But I hope the market continues to open up and become more efficient.

You say that but haven't BT/Openreach been trying to make the market more competitive using Equinox 2 but the altnets are up in arms and don't seem to want it.

Hi burble
I wasn't aware ISPs were given specific permissions as it relates to setting price increases, I thought consumer pricing was set by the companies as they wish (with the exception of BT where they cannot go too low for anti-competitive reasons). But not something I know too much about. I didn't know Sky - very interesting.
As another has commented earlier in the thread, I have made the decision to go with another provider while I run down the last couple of months of my BT contract. The other provider is HeyBroadband, an alternative network provider which runs their own FTTP infrastructure, on the smaller side with 5000 customers in the UK, reasonable price, fixed price for the term of the contract. So far so good but time will tell if these new entrants are able to keep prices low and service high.

In reply to a post by dect:

In reply to a post by SpeedyPdA:

You say that but haven't BT/Openreach been trying to make the market more competitive using Equinox 2 but the altnets are up in arms and don't seem to want it.

An interesting one for Ofcom to figure out, I understand they will publish in the next month or so.
From my [simple] perspective, we need to make sure that market share is spread sufficiently so that no one market player has too much control which then impedes on the pace of innovation, service quality and consumer pricing. Does Equinox 2 price reductions help or hinder that... I actually don't know.

Price rises are basically in the contract.

RPI plus some percentage.

I don't think most businesses expected inflation to be so high, but it is and so the contract says that's the increase.

Not putting prices up could be a marketing plus but as their costs are going up there's not a lot of commercial incentive to keep them the same.

For those struggling with costs there are social tariffs available.

If Heybroadband where to build out their network to my area and offer those prices I would be interested, but they will never do that, the costs for them would be high and then they would be charging just the same as BT.
As it happens my contract has just run out and I'm now paying a lower price than I was previously paying, next year I will be hit by 3.9%+ CPI increase, but the year after I will be looking for deals again.

In reply to a post by burble:

AFAIK, 3.9% of increase is being allowed for all ISP's to cover capital expenditure on infrastructure

Who is it being "allowed" by? Does anything stop them putting CPI+50% in their contracts if they wanted to?

Most ISPs buy tail circuits from Openreach. At the lower speeds (40M) these wholesale prices are regulated by OFCOM, and index linked by a formula. It was 11% rise this year - much lower that the ISPs applied to their customers.

But given that ISPs are continuing to sell services to new customers at the *old* prices, it shows that their cost bases aren't increasing significantly. Rather, these CPI+ rises are really just a way to make the headline contract price look lower at the time the customer signs, whilst locking them into paying a higher price when averaged across the whole term.