Ofcom said it expects operators to pass the lower access costs on to residential consumers through cheaper prices, boosting competition as each player in the sector builds their own fibre networks in order to challenge Openreach's dominance.
Openreach could face fines if it fails to meet the new targets set by the regulator.
This robust approach follows news that BT has agreed to Ofcom's demands that it spins Openreach off into a standalone company with an independent management board in order to ensure wholesale customers receive the same of level of service as the incumbent's own retail operations.
BT is required by Ofcom to allow rivals to use the its fibre network but at present Openreach provides packages of varying speeds and charges providers different wholesale prices for using each one.
Ofcom has published two consultation documents setting out its proposals for the future regulation of the wholesale local access market and a third will follow.
The deadline for responses is 9 June 2017, and the regulator expects to publish its final decisions in a statement in early 2018, with new measures taking effect on 1 April 2018.
The first document sets out its market analysis, broad approach to remedies, proposals for the access products BT will be required to provide and prices for these products. The second document addresses quality of service issues on BT’s fixed access network and the third will set out proposals for duct and pole access.
Ofcom said action on prices is needed because demand for data-hungry, new-generation internet services means consumers are increasingly obliged to migrate from the slower, cheaper services that had until now kept BT's ability to raise prices in check.
The regulator believes the key segment for future competition is services offering 40Mbps download and 10Mbps upload speeds and it plans to cut Openreach’s annual charges for these products from the current GBP 88.80 to GBP 52.77 in 2020-21, a 40.5 percent reduction.
Ofcom ruled out however a cap on the price Openreach charges rivals for higher-speed packages, including the forthcoming G.Fast network allowing speeds of 330Mbps over traditonal copper wire, commenting that the 40/10 Mbps price intervention should be enough to protect competition and protect consumers from higher prices.
Ofcom also proposed maintenance and installation targets to be reached by 2020-21.
It wants Openreach to complete 93 percent of fault repairs within one to two working days of notification, compared with 80 percent at present, and complete 97 percent within six or seven working days.
The company would also be required to provide an appointment for 90 percent of new line installations within 10 working days of notification, compared to 80 percent within 12 days as at present.
