Ofcom proposes cuts to wholesale broadband charges

The price BT is allowed to charge for its wholesale broadband is set to be slashed by Ofcom, leading to savings for the consumer.

BT today proposed new charge controls on BT’s Openreach products, which it sells to smaller ISPs so they can offer broadband telephone lines over the dominant network.

If the plans go through, the current charge of £84.26 for fully unbundled lines – which enable providers to install their own equipment for telephone and broadband services in BT’s exchanges – could fall by up to 6% every year between April 2014 and March 2017.

Shared unbundled lines – ISPs using their own equipment for broadband but BT’s voice network – will see the £9.75 annual charge fall between 8% and 12% every year and wholesale line rental – where providers use BT’s voice network to offer their own phone service – will drop from £93.27 annually by between 2% and 8% over the three year period.

Ofcom hopes these savings will then lead to cheaper deals for consumers buying services from providers using BT’s wholesale network.

“These controls would reduce wholesale charges that could be expected to lead to real-terms price reductions for consumers, as communications providers pass on savings to their landline and broadband customers,” read a statement from the regulator.

The changes should not come as a surprise to BT. The prices have always been regulated by Ofcom due to the significant market power held by the telecoms giant across the UK and last week the regulator published its fixed access market review showing this dominance was still apparent.

This review also made proposals around cutting the minimum contract ISPs have to sign up to in order to get virtual unbundled local access (Vula) from one year to one month and to slash the charge levied by BT to ISPs when they change providers.