Ofcom moves to cut UK broadband prices
31st Mar 2011 | 09:32
Cheaper home phone and internet on the way
Ofcom has made moves to cut the cost of Brits' broadband and home phone services, cutting the wholesale price that Openreach can charge for these services.
Openreach manages BT's network and charges other providers for the use of its facilities.
This could mean that the wholesale price to some broadband and phone providers could be reduced by up to 10 per cent per annum.
TalkTalk and Sky customers may well benefit from the latest Openreach cuts.
Local Loop Unbundling
Ofcom proposes two ways that BT's rival operators can cut the cost of their services.
Firstly, a method called Local Loop Unbundling will allow BT's competitors to place their own equipment in local BT exchanges.
Ofcom proposes that Openreach charges to operators that take over these lines are cut by 1.2 to 4.2 per cent per year. Charges for shared lines should be cut by 11.6-14.6 per cent per year.
Ofcom calculates that there are around 7.6 million unbundled lines in the UK.
Ofcom is also proposing a price cut called Wholesale Line Rental, which gives BT's competitors the option to rent lines from Openreach, with the price of such rental to drop by 3.1 to 6.1 per cent per year.
"Ofcom expects its proposed prices to lead to real term price reductions for consumers, as communications providers pass on savings to their landline and broadband customers," reads an Ofcom statement.
BT responded, issuing the following statement: "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.
"Upon initial review, we are encouraged by Ofcom's recognition of this fact, but would question some of the underlying assumptions being used."
A consultation process is now underway which should be resolved by 9 June, after which Brits will finally know how much they will be able to save over the year on their broadband and home phone packages.
Via BBC News