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Ofcom Opens Door to Higher Broadband and Line Rental Prices

Posted: 30th May, 2008 By: MarkJ
Ofcom has today begun a review of the prices that BT Openreach can charge communications providers for its wholesale access telecoms services. This includes both residential and business Wholesale Line Rental (WLR) and Local Loop Unbundling (LLU - SMPF/MPF) lines.

The move follows claims made by BT earlier in the year, which warned that its Openreach division, which was created to ensure fair access to its network for all operators, was no longer making the agreed 10% regulatory return on investment:

When Openreach was created, Ofcom agreed the maximum prices that it could charge for its main services. These charges did not include an annual adjustment for inflation or other cost movements. At the time Ofcom said it would review the charges in the future and today’s publication marks the start of the review.

The consultation will be in two stages. Today’s consultation sets out the considerations that Ofcom will take into account in determining any new charges. The second consultation - due later in the year - will set out more detail on the proposed new charges.

http://www.ofcom.org.uk/consult/condocs/openreach/

It's predicted that the outcome will see some small price increases, although by how much and to precisely which areas it would apply remain unknown. Naturally this could increase ISP service costs and thus cause the price of consumer packages to rise as well. Ofcom’s current charge ceilings for annual rental are as follows:

Residential WLR £100.68
Business WLR £110.00
MPF £81.69
SMPF £15.60

Typically any increase, even by as “little” as a few pence per month, could have serious consequences for ISPs that have lengthy customer contracts to uphold. £1 or £2 extra per annum may not seem like a lot, but multiply that by several hundred thousand to a few million customers and the problem quickly becomes apparent.
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