Ofcom calls on BT to cut charges for broadband
Friday 01 April 2011
Communications watchdog Ofcom has called on BT to cut wholesale broadband and landline prices, but insiders at the telecoms giant said it was too early to tell whether the difference will be passed on to customers.
The regulator yesterday opened its consultation for new prices on BT's Openreach and Wholesale line rental arms. It hopes the former, in which companies such as TalkTalk and Sky can put their own equipment in BT exchanges and run the lines themselves, will drop between 1.2 per cent and 4.2 per cent every year. The Wholesale business, where groups such as the Post Office rent lines from Openreach to offer to customers, will see prices drop between 3.1 per cent and 6.1 per cent.
The regulator expects the prices to bring "real-terms price reductions for consumers, as communications providers pass on savings". It sets the prices because BT Openreach is seen to have "significant market power".
A spokesman for BT said that given that it invests more than any other company in the UK's communications infrastructure it should be able to receive a "fair rate of return", adding that it would raise "some concerns during the consultation process". An insider said that factoring in inflation, Openreach costs would still rise, while Wholesale would see a slight fall, adding: "It's too early to know if customers will see any benefit, but it won't be huge."
Separately, Ofcom said it would slash its own budget by 20 per cent next year.
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