Ofcom calls on BT Openreach price cuts for ISPs

Ofcom is pushing for a price fall in broadband and landline services, after the telecoms watchdog said today that BT would have to slash charges it currently dishes out to providers that use its network.

The regulator has proposed lower prices for BT's wholesale wing of its business that gives other ISPs access to install their own kit in the telcom giant's Openreach exchanges, as well as allowing those providers to rent lines from the company.

Under the proposals, BT's Local Loop Unbundling (LLU) and the Wholesale Line Rental (WLR) services have been targeted for price cuts by Ofcom.

It called on price reductions of the company's LLU service to drop between 1.2 per cent and 4.2 per cent every year. The regulated price for that service is currently set at £89.10 per year.

Ofcom proposed that a shared unbundled line to a property, where an ISP uses a proportion of the line only for the provision of broadband, should see the wholesale price fall by between 11.6 per cent and 14.6 per cent every year. It's currently got an annual price tag of £15.04.

The watchdog added that BT's WLR service, currently set at £103.68 per year, should see a price reduction of between 3.1 per cent and 6.1 per cent every year.

Ofcom has launched a consultation based on its proposal and plans to publish a statement in autumn 2011 detailing the prices it has settled on with BT.

"BT invests more than any other company in the UK’s communications infrastructure, so it is critical that it is able to achieve a fair rate of return in order to continue its investment in copper and fibre based services," said the company.

"Upon initial review, we are encouraged by Ofcom's recognition of this fact, but would question some of the underlying assumptions being used. As a result, we will be raising such concerns with Ofcom during the consultation process."

In May 2009 BT complained about Ofcom's changes to wholesale prices, by grumbling that it would effectively make a loss on each connection. ®