Ofcom Proposes New BT Line Rental Cap

BT may have to lower the prices it charges others to operate services using its lines, if Ofcom’s new plans receive approval from the European Commission (EC).

The news could reduce the cost of broadband from BT’s competitors such as TalkTalk and Sky, if they choose to pass the savings onto customers.

Cheaper broadband?

The proposals have been submitted for approval to the EC, which has one month to comment, and if this is granted, the changes could come into effect as early as April. The plans would see the cost of using broadband or a phone line fall from £91.50 per year to £87.41, while the cost of using just a broadband line should drop from £14.70 a year to £11.92.

“Ofcom has notified the European Commission of provisional new charge controls that will apply to certain services provided by Openreach, BT’s wholesale access division,” said Ofcom. “Ofcom will adopt the new controls, subject to the outcome of the European Commission’s new consultation process.”

Ofcom regulates the prices that BT Openreach can sell its services at as it “has been found to have significant market power in the delivery of these services.” The EC has placed the regulatory authority under pressure as it wants to reduce the cost for alternative operators wanting to access BT’s network. TalkTalk has welcomed the proposals, but BT has indicated that it may appeal.

Ofcom said that Openreach should cut its wholesale prices in March last year. 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.

Last week, Ofcom released its report on broadband performance in the UK, concluding that although internet speeds were rising, ISPs should be more transparent with their advertising. Ofcom is also responsible for the auction of the 4G spectrum, which is scheduled to take place later this year after a number of delays.