UK regulator Ofcom has proposed new prices that can be charged by Openreach, the independent wholesale access division of incumbent operator BT.
Ofcom has suggested cuts for unbundled services of between Retail Price Index (RPI) -1.2% and RPI-4.2% from…
UK regulator Ofcom has proposed new prices that can be charged by Openreach, the independent wholesale access division of incumbent operator BT.
Ofcom has suggested cuts for unbundled services of between Retail Price Index (RPI) -1.2% and RPI-4.2% from the current rate of £89.10 a year. For shared unbundled services, the regulator proposes a reduction of between RPI-11.6% and RPI-14.6% from the current £15.04 rate.
Wholesale line rental rates could also face a cut of between RPI-3.1% and RPI-6.1% from the £103.68 current rate under the plan, which Ofcom expects will come into effect later this year and will run until 31 March 2014.
“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,” the regulator said in a statement today.
However, Brian Potterill, a director in the telecoms strategy team of accounting giant PwC, cautioned that BT’s fibre roll-out plans could counteract these price reductions.
“BT has already announced plans to cover two thirds of households with its fibre service; more than in any other major economy, and provides copper based broadband to the vast majority of the country,” said Potterill.
“Other broadband providers reach 90% of households by unbundling BT’s copper infrastructure. As Ofcom lowers the prices that BT can charge for this, BT has greater incentive to invest further in fibre on which it has more pricing freedom. But, BT still believes that there is no commercial case for fibre beyond its planned two thirds of the population. Ofcom’s proposals will certainly improve the case.
“If demand for fibre services grows, Ofcom’s proposals may start to tilt BT’s commercial case for more fibre investment earlier.”
