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Unbundling could cost you £125

BT thanks blames IT system for extra revenue stream

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Update Unbundled ISPs are more popular than ever with Sky announcing rapid growth of its broadband service. What they don't tell you is that you could be stung with a £125 charge if you opt for a fully unbundled service.

In some cases, if a customer wants to switch back to a BT reseller ISP, or to another fully unbundled ISP*, BT Openreach slaps a £125 charge for an often unnecessary engineering call-out. The unbundled providers, who save money by not paying BT Wholesale for provision, don't tell consumers about the charges when they sign up.

Ofcom told us: "Ofcom is working with Openreach, BT Retail and other communications providers to identify the reasons for this and to identify a solution as soon as possible."

BT blames the situation on its IT system. It said: "For most customers there is no problem coming back to BT and it shouldn’t cost them anything. Where a working line exists our intention is that reconnection should be free - but a charge of £125 applies where we have to involve an engineer."

"In a small minority of situations such as where a customer is returning to join BT from a Local Loop Unbundled competitor, our systems default to charging £125. We do intend to change this as soon as possible. It is one of a number of complex changes arising from BT Retail's adoption of a new IT system to comply with its commitment to the regulator, Ofcom."

In the meantime, don't consumers deserve to be told if their line is being unbundled?

In related news, today it emerged Ofcom is considering letting BT Openreach up its charges for unbundled lines, saying "We are aware of BT's concerns with respect to revenue and profit level in the future".

The change would be fiercely resisted by Tiscali, TalkTalk and others who have led the charge for rock-bottom pricing by unbundling. Openreach currently charges client providers (including BT Retail) £6.67 per line per month. That could shoot up to £10, it's reckoned by industry observers.

For Tiscali in particular, which has relatively shallow pockets, the cash it saves by unbundling is a key part of its strategy to to turn its first ever profit this year. Any increase in the cost would be extremely unwelcome. Conversely, BT will push hard for a rise to boost the group's slowing revenue growth. City analysts expect its second set of disappointing quarterly financials tomorrow, and further big cuts of up to 2,000 jobs.

Expect the providers opposing the rise to spin it as a blow for British broadband, as unbundling has allowed speeds of up to 24Mbit/s from providers such as Be Unlimited, who have invested early in ADSL2+. They will try and tie it to the ongoing, unrelated discussion on next generation networks and UK competitiveness. As ever, it's really all about the money.

[Update: This story has been corrected from an earlier version that wrongly stated former Pipex customers could be affected by the £125 charge if they want to leave Tiscali, their new provider. Tiscali has been in touch to say that is not true, as it is only partially unbundling lines. We'd like to apologise for the error.- Ed] ®

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