Scots broadband users face rising bills as BT rolls out fibre in rural areas

The telecoms regulator claimed that its proposed changes to the regulation of the Openreach network, which is owned by BT, would allow for “supercharged” investment in broadband, backing Boris Johnson’s goal of giving all of Britain the best broadband by 2025.

The Government has already set aside £5 billion to fund fast internet in rural areas, money that will most likely find its way to BT’s Openreach arm.

But Ofcom has acknowledged concerns that to allow rural areas to get into the fast lane customers in those areas could face higher prices.

READ MORE: Scotland - the poor man of UK over broadband and mobile services

A study in December revealed that nearly half of the constituencies in Scotland have poor mobile phone signals and broadband connection due to a substandard technology network.

According to the analysis, of 269 areas in the UK with the worst mobile and broadband service, 29 were in Scotland – amounting to around half of all the parliamentary constituencies in the country. Five of the 10 areas with the poorest broadband service are in rural parts of Scotland. Orkney & Shetland had the worst broadband service in the UK, with just three in four premises with access to Ofcom’s definition of a decent connection – a download speed of at least 10mpbs with 1mbps upload.

The Ofcom proposals, out for consultation would allow Openreach to recover investments costs "through its wholesale prices (what BT charges rival retail providers who use its network)...reducing the risk of its investment".

"If BT provides a firm commitment to build fibre in these parts of the country, we can include these costs in its prices upfront. If not, we would only allow it to recover these costs after it lays new fibre," said Ofcom.

Richard Neudegg, head of regulation at uSwitch.com, warned that higher wholesale prices mean costs could be passed on to consumers.

“On the face of it, this is good news for consumers, many of who still suffer with sub-par broadband.

Camley's Cartoon: Superfast broadband delayed.

"However, where Ofcom is proposing to allow higher wholesale prices, these inevitably get passed on to consumers.

“It remains important to keep an eye on any increases in costs that consumers might face to help support network investment - consumers will expect to see real improvements in the services they are actually receiving, both in terms of speed and reliability.

Broadband became a major talking point in the general election after Labour vowed to nationalise Openreach and offer free internet for all, while Prime Minister Boris Johnson pledged to roll out fibre broadband to all homes within five years.

On ly about 3m, or 10 per cent, of British homes can connect to a full-fibre line, although the number has trebled in the past two years.

It is estimated houses in the rural parts of Britain cost about 10 times more to upgrade to full-fibre internet connections than those in urban areas.

In December it emerged that the SNP’s flagship £600 million pledge to bring superfast broadband to every home and office in the country could be delivered three years late.

READ MORE: Superfast internet three years late

Mr Neudegg added: "Ofcom has acknowledged that in the most rural areas, public money is still going to be required in order to achieve the stated aim of full fibre for everyone.

“Ultimately any pledge to supercharge investment in fibre broadband will only be effective if people are given genuine choice underpinned by functioning competition between providers.

“Only then will demand for full-fibre start to match supply and consumers will really feel the benefits of more reliable and faster services.”

Natalie Hitchins, head of home products and services with consumer organisation Which? said the improvements to broadband in rural Scotland which suffers from some of the poorest internet connections in the UK "must also truly offer consumers good value for money."

Ofcom's proposals would give BT rivals such as Sky and TalkTalk easier access to its network to reduce disruption to roads.

In more urban areas, where it is likely a number of network rivals operate, Ofcom wants to set Openreach's wholesale prices in a way that encourages competition from newcomers.

However, it is also proposing that Openreach be allowed to charge a "small premium" for regulated products if they are delivered over full-fibre.

Under the Ofcom proposals, in urban areas, Openreach will have to cap wholesale prices in line with inflation.

COMMENT: Why should broadband be free when water, power and heating aren't?

An Ofcom spokesman said: "Even though there are costs involved in upgrading the network that doesn't necessarily mean huge retail price rises. We are not saying that prices won't go up in urban or rural areas.

"But in the past ten years, BT has been upgrading its network to all copper to part fibre and part copper and we have seen broadband infrastructure improve but in real terms, prices haven't really gone up that much.

"One way or another, the country's infrastructure needs upgrading, everyone agrees with that. And it costs money to upgrade that network and that has to be reflected in Openreach's wholesale charges."

An Openreach spokesman did not comment on concerns on bill rises. The spokesman said: “Today’s proposals appear to be a big step in the right direction to give clarity and investment certainty.

“Like the Government and Ofcom, we want to upgrade the UK to faster, more reliable full fibre broadband. We’re getting on with the job, building to 26,000 premises each week and we remain on track to reach 4m homes and businesses by the end of March 2021.”

“We’ll consider the range of proposals carefully and will continue to work with Ofcom and industry on getting the conditions right to help achieve the Government’s ambition of rolling out gigabit capable broadband across the UK as soon as possible.”

Openreach's biggest rival, Virgin Media, said: "We are rolling out gigabit connectivity across the UK and passionately believe that building next-generation broadband needs to be supported by regulators and Government.

"These measures are an important step forward in providing the long-term certainty and clarity network investment requires."