BT Battle With Ofcom Refered To Competition Commision

An appeal by BT against Ofcom’s decision to increase prices for local loop unbundling (LLU) has been referred to the Competition Commission.

Back in March it emerged that BT was considering launching an appeal, after Ofcom officially set the wholesale line rental charges for BT Openreach.

Those new wholesale charges set the limit for how much Openreach could charge rival ISPs to access BT lines for broadband and telephone services.

Appeal background

Ofcom had previously submitted its LLU price proposals for approval to the EC, earlier in the year.

This saw the annual cost of a fully unbundled line to a property fall from £91.50 per year to £87.41 per year. The price for a shared unbundled line to a property also dropped from £14.70 a year to £11.92, and wholesale line rental (for telephone services using BT lines) dropped from £103.68 per year to £98.81 for financial year 2012/13.

BT went ahead with its threat of an appeal in May, and its objection was heard by the Competition Appeal Tribunal (CAT). On 24 July CAT in turn referred the appeal to the Competition Commission.

The news of the appeal referal emerged in a posting by Ian Grant of the Broken Telephone (Br0kenTeleph0n3) blog.

According to Grant, BT is objecting to Ofcom’s calculation because it alleges it contains “material errors” in the allocation of costs or income associated with LLU and WLR (wireline rental) services and the valuation of relevant assets.

However, TechweekEurope understands that Ofcom disputes this claim of material errors, and it is this sticking point that will be scrutinised by the experts at the Competition Commission.

BT and the Competition Commission had not responded to TechWeekEurope’s request for comment at the time of writing.

Sky, TalkTalk, and indeed Everything Everywhere have previously backed Ofcom calculation.

Unhappy BT

This has been a long-running dispute between BT and Ofcom.

Ofcom warned BT Openreach last year that it should cut its wholesale prices. Its prices are linked to the Retail Price Index (RPI), but Ofcom suggested that they should be adjusted in real terms as the cost of providing a network decreases.

In July 2011 Ofcom also cut the wholesale price that BT can charge ISPs in parts of the country where it is the sole provider of wholesale broadband, i.e. in rural regions where BT’s lines are the only network connection to rural or semi rural areas, villages and towns.

BT remains unhappy at those decisions. “We continue to disagree with some of the underlying assumptions they have used to determine these controls with our primary concern being 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,” BT told TechWeekEurope back in March.

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