Ofcom proposes new wholesale prices for Openreach

New prices that Openreach, BT’s wholesale access division, can charge communications providers for access to some of its main wholesale telecoms services were today proposed by Ofcom.

The prices are regulated by Ofcom because Openreach has been found to have significant market power in the delivery of these services.

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.

Today’s consultation relates to wholesale charges for telephone and broadband services delivered to homes and businesses over BT’s copper network in two ways:

Local Loop Unbundling (LLU), which allows communications providers to install their equipment in Openreach’s telephone exchanges to provide broadband and telephone services to their customers; and

Wholesale Line Rental (WLR), which is used by communications providers to offer telephone services to consumers using lines rented from Openreach.

These wholesale products underpin the competitive provision of broadband and landline services in the UK. LLU can be supplied alongside or in combination with WLR, providing choice and flexibility for consumers.

The number of ‘unbundled’ lines has increased from 123,000 in September 2005 to 7.59 million today and there are 6.14 million WLR connections in the UK, enabling a range of communications providers to offer landline and broadband services.

The proposed prices strike a balance between providing incentives to invest in networks and ensuring that broadband and landline prices are affordable for consumers.

Ofcom is consulting on the following controls on annual rental charges which are expected to come into effect later this year and will run until 31 March 2014:

A 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.

A 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 aims to publish a statement in autumn 2011.

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