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BT rejects wholesale price changes

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BT is not happy with Ofcom's changes to wholesale prices, and is complaining it will effectively make a loss on each connection.

Ofcom sets prices for BT's wholesale division Openreach. From today until May 2010 BT can charge £86.40 for each unbundled line - up from £81.69. Where a broadband provider shares the line with BT, by only providing broadband, the telco can charge £15.60 - the same as last year. Other charges go up in line with underlying cost increases.

Ofcom's chief exec Ed Richards said: "The new prices will enable Openreach to earn a fair return whilst allowing continued strong consumer take-up of broadband at competitive prices."

But BT said: "Ofcom has taken a tentative step towards rebalancing the market but that step is insufficient and creates real disincentives for future investment. It was previously agreed that Openreach would be allowed to fully recover its costs and that is all we are asking for.”

The prices are certainly towards the bottom end of the range - Ofcom was expected to set prices between £85 and £91. Prices for shared lines were expected to go up to £16.20.

The regulator set maximum prices in 2006, but there was no way to adjust them for inflation or other changes.

Ofcom decided against setting new prices for wholesale line rental - where BT's network is used by rival telcos to provide telephony services - until after its review of the wholesale narrowband market. It is expected to report back on prices in that market shortly.

Ofcom's statement is here. ®

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