Ofcom proposes fall in BT Openreach charges to rivals
Just wait for that nice Brussels man to agree
Updated BT will be forced to cut the prices of the access charges it applies to the company's broadband and telephone lines when leasing them out to other providers, Ofcom said today.
The communications watchdog, which regulates BT's Openreach division because the business has a dominant market position in Blighty, submitted its "provisional new charge controls" to the European Commission this morning.
Ofcom said the decision was at a draft stage, and that it would be scrutinised by Brussels' officials before a final ruling is reached in March this year.
For a fully unbundled line (telephone and broadband) to a property, the watchdog proposed that Openreach should reduce its annual rental charge from £91.50 to £87.41 for the 2012/13 financial year.
It provisionally set the cost of a shared unbundled line (broadband only) to a property, slapping on a wholesale price tag of £11.92 per year, compared with the current annual charge of £14.70.
Finally, Ofcom said it also wanted to see wholesale line rental costs fall from £103.86 per year to an annual price tag of £98.81.
The regulator reiterated that it wanted to see BT's Openreach prices continue to decrease.
Previously, rival ISPs have been deeply critical of the national telco's "restrictive pricing".
In September last year, TalkTalk's commercial boss David Goldie claimed that BT was trying to regain "the monopoly position that it lost many years ago" courtesy of its provision of fibre optic broadband.
Concerns over the pricing of BT's duct-and-pole infrastructure were repeatedly highlighted to Ofcom, which eventually convinced the company to reduce its pricing.
BT, for its part, has warned the City that its wholesale business was being hampered by too much regulatory meddling.
A BT spokesman told The Register: “Whilst the prices are within the range outlined by Ofcom in November, we disagree with some of the underlying assumptions that they have used to determine these charge controls. Our primary concern throughout this process is to ensure that we are able to achieve a fair rate of return in order to continue our investment in the future of the UK’s communications infrastructure. We will consider all options available to us, including appealing, after Ofcom confirms its final decisions." ®
Problem is the ducts etc
BT got their infrastructure at literally a bargain basement price, the pole network and the ducting is what is worth the cash to BT, the costs of laying new ducts alongside those BT got for a pittance would likely be astronomical, ergo BT has a massive advantage over every other company.
The infrastructure should have been fully spun off from BT into a not for profit company.
Said NFP would then have been able to impartially charge every telco for access to the duct and pole network, without conflicting interests (ergo the need to protect BT Wholesale and BT retail from competition to maintain the value of certain peoples share portfolios)
How much longer are Virgin going to be allowed to monopolise the cable infrastructure?
"It's pretty obvious that there are some exchanges (about a third perhaps) where no-one but BT is prepared to go. "
And why are they unprepared to go there? Lack of profit that's what. If companies want to set up as LLU providers Ofcom should place a simple condition upon them: Their charges should be the same for every customer, no matter what exchange they are on.
At the moment LLU providers advertise a nice low headline rate and then stick a huge markup of £15 or more on you the moment it turns out you're not on an exchange where they have their own kit and network connection. Yes I know that means they have to resell you a BT Wholesale package, but they should have to factor that into their overall pricing. BT wouldn't get away with charging you more because you were on a remote little exchange with very few customers so why should the LLU providers get away with doing what is basically the same thing?
OK so it's not going to happen overnight, but why don't those toothless twats at Ofcon put some sort of sliding scale in place over the next five years? So they have to bring in uniform pricing gradually to ease the shock on customers who's prices will inevitably go up.
And don't give me that crap about their being no room in the exchanges for any other kit. Our local rural exchange used to be crammed with hefty kit, but in the last few years much of it has been replaced with a handful of 19" racks. There's acres of space in there for other providers to stick their kit.