Ofcom challenges BT over line fees

The prices consumers pay for broadband and landline telephone services
are expected to fall after Ofcom announced plans to reduce the amount BT
can charge rivals to rent lines.

The communications regulator has proposed cuts of up to 19% in the amount that BT's wholesale network Openreach, which owns the majority of landlines in the country, will be able to charge from April, with further decreases the following year.

This is the third time Ofcom has set the prices that Openreach charges other companies for using their lines and its proposals are expected to benefit BT's rivals such as TalkTalk and Sky, who may choose to pass on the lower costs to consumers.

However, BT said it is considering appealing against Ofcom's decision because it disagrees with the way it had done its calculations.

BT said it needed to get a "fair" rate of return if it is to continue investing in the UK's infrastructure. It is currently rolling out superfast broadband to two-thirds of the population by 2014.

A BT spokesman said: "Whilst the prices are within the range outlined by Ofcom in November, we disagree with some of the underlying assumptions that they have used to determine these charge controls.

"Our primary concern throughout this process is to ensure that we are able to achieve a fair rate of return in order to continue our investment in the future of the UK's communications infrastructure."

Ofcom's plans would see the amount BT can charge for a telephone and broadband line fall 4.5% to £87.41 per year. However, the cost of using a broadband line only should also drop 18.9% to £11.92.

Ofcom has submitted the proposals for approval by the European Commission and is due to publish its final decision early next month. Ofcom regulates the prices BT can charge because it has "significant market power".

PA