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Ofcom caps LLU charges

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Ofcom wants to set a price ceiling for fully unbundled local loops as part of plans to increase competition for wholesale broadband.

Last month BT cut the cost of renting a fully unbundled line from £105.09 to £80 a year. Despite BT's first move Ofcom is keen to set a cap on rental charges so that BT can't increase the cost to rivals at a later date.

So after months of analysis trying to figure out the value of BT's copper network Ofcom has finally worked out that the cap should be...wait for it...£81.85. Of course, this is just a proposal and Ofcom is consulting on this until October 10.

Local loop unbundling (LLU) - the process by which phone lines that service homes and businesses are disconnected from BT's network and reconnected to another provider such as Easynet, "Be" or Bulldog - is regarded as vital to help improve wholesale broadband competition.

Elsewhere, Ofcom also announced proposals that could give BT greater freedom to offer discounts to large companies. At the moment, BT is not allowed to veer from its published tariffs as part of a move to prevent the dominant telco from abusing its dominant position.

But Ofcom reckons there is now sufficient competition out there - among providers of telecoms to large companies at least - to give BT some extra elbow room.

The deregulation - should it be introduced - would apply to companies that spend in excess of £1m a year with BT.

And just to ensure that BT doesn't abuse its position and offer ridiculously low tariffs that would hurt rivals, the regulator is also proposing to limit how much BT can reduce its tariffs.

The industry has until November 16 to mull over Ofcom's plans. ®

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