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Ofcom UK Proposes Cheaper BT Phone and Broadband ISP Prices for Consumers

Posted: 31st Mar, 2011 By: MarkJ
ukofcomThe UK communications regulator, Ofcom, has today proposed a new pricing structure for unbundled ( LLU ) and wholesale ( WLR ) landlines that will also affect copper / DSL ( ADSL etc. ) based broadband connections. The move means that BT Openreach, which is responsible for ensuring that all rival ISPs have equality of access to BT's local network, will be forced to slash their annual line rental prices.

Ofcom notes that the number of unbundled telephone lines, where partial or full control has been passed from BT to a rival ISP, has increased from 123,000 in September 2005 to 7.59 Million today. By contrast BT Wholesale Line Rental (WLR) connections now account for a total of 6.14 Million lines.

The regulator claims that BT still has Significant Market Power (SMP) in the delivery of these services and, following a recent review of BT's underground cable ducts (crucial for determining service charges), has decided to slash prices in order to ensure that consumers aren't ripped off overcharged.
Ofcom's New Broadband and Phone Line Price Proposals

* Fully Unbundled Line to a Property - where a communications provider takes over the line to provide broadband and telephone services.
The regulated wholesale price today is £89.10 per year. Under Ofcom’s proposals this will decrease in real terms by between RPI-1.2% and RPI-4.2% every year.
* Shared Unbundled Line to a Property – where a communications provider uses a proportion of the line only for the provision of broadband.
The regulated wholesale price today is £15.04 per year. Under Ofcom’s proposals this will decrease in real terms by between RPI-11.6% and RPI-14.6% every year.
* Wholesale Line Rental – used by communications providers to offer telephone services to consumers using lines rented from Openreach.
The regulated price today is £103.68 per year. Under Ofcom’s proposals this will decrease in real terms by between RPI-3.1% and RPI-6.1% every year.
Ofcom hopes that the proposed changes will lead to "real term price reductions for consumers, as [ISPs] pass on savings to their customers." In reality this rarely ever happens because most of an ISPs costs tend to come from bandwidth charges and not line rental. However some providers may indeed pass the relatively small savings on.

BT is unlikely to be happy with the move and frequently argues against such measures, despite Ofcom's claim that its changes will "strike a balance between providing incentives to invest in networks" and giving consumers fairly priced phone and broadband services. BT could of course simply raise prices in other areas where Ofcom no longer has as much oversight.

Ofcom's consultation on the new price controls will run until 9th June 2011, after which a statement will be published to detail the final price levels. The proposed prices are not expected to change by much, though they do sometimes see a slight adjustment from the initially proposed levels. The new prices themselves would then come into effect later this year and will run until 31st March 2014.
Ofcom's Charge Control Review for LLU and WLR Services from BT
http://stakeholders.ofcom.org.uk/consultations/wlr-cc-2011/
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