Ofcom wholesale proposals could lead to cheaper landline and broadband services for customers
Ofcom has proposed to lower the cost of access to the BT Openreach network as part of changes that could reduce the cost of landline and copper broadband services for customers, if providers choose to pass on the savings.
The cost of access to the Openreach network is regulated by Ofcom because BT has been found to have ‘significant market power’, something which the regulator’s Fixed Access Market Reviews consultation reaffirmed when it was published last week.
The proposed changes would be applicable from between 1 April 2014 and 31 March 2017 and would be linked to inflation under the Consumer Price Index. This, Ofcom says, will not only preserve competition, but encourage BT to make efficiency gains.
BT Openreach access
Access to fully unbundled lines, which allow service providers to use their own equipment at telephone exchanges to offer landline and broadband services, currently costs £84.26 per year. Under the new proposals, prices would fall by up to six percent every year, after inflation is taken into account.
Ofcom proposed reducing the cost of access to shared-bundled lines, which allow service providers to offer Internet services but not voice, from £9.75 a year by between 8 and 12 percent each year after inflation. Finally, the cost of wholesale line rental would be reduced from £9.73 a year by between 2 percent and eight percent after inflation.
Earlier this year, Ofcom praised the competitive nature of the UK broadband market and said there are currently nine million unbundled copper lines in the UK. Since 2005, the average cost of a broadband service delivered over a copper telephone has dropped from £23.60 a month (excluding VAT) to £13.11.
The changes do not impact the cost of accessing BT’s fibre network, but the company has said the regulator’s latest proposals underestimate the cost of running the network.
“These proposals are complex and we will review them in depth,” a BT spokesperson told TechWeekEurope. “There are a number of areas where we believe Ofcom have not fully recognised the costs of providing services.”
TalkTalk has long been critical of the comparative lack of competition in the superfast fibre market and has called for regulation in the sector. It is pleased by both today’s proposals and last week’s calls for one month broadband contracts and reducing the wholesale cost of switching from one fibre supplier to another.
“Ofcom’s proposals last week to more tightly regulate BT’s monopoly in superfast broadband will increase competition and result in better service from BT Openreach and customers finding it easier to switch,” it said. “We further welcome today’s announcement to reduce the wholesale copper prices BT Openreach charges which will further underpin competition going forward.”
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