Ofcom proposes a new wholesale prices for Openreach

Ofcom today consults on a new range of proposed prices that Openreach can charge communication providers for access to its main wholesale telecoms services.

The proposals follow an earlier consultation in May 2008 and concern the products that are used to deliver the vast majority of voice and broadband services to people’s homes.

Five million lines already unbundled

Local loop unbundling allows communications providers to offer their own retail services over BT’s copper network. In three years, the number of “unbundled” lines has increased from 123,000 to over 5 million, offering consumers more choice and better value for money.

The spur for this was a set of legally-binding Undertakings that Ofcom agreed with BT Group and which led to the creation in 2006 of the operationally-separate BT business unit Openreach.

Separately, Ofcom also set the maximum prices that Openreach could charge for its wholesale services. These charges did not include an annual adjustment for inflation or changes to other costs. In light of the impact of inflation on Openreach’s costs, Ofcom has decided it should now consider changes to these charges to reflect developments since the previous prices were set.

New prices for sustainable competition

The proposals cover Openreach’s network services to homes and businesses. They are designed to promote continued competition in the provision of voice and broadband services and to ensure that Openreach has the appropriate incentives to invest in delivering the services required by its customers.

Ofcom is consulting on the following ranges for annual rental charges for the first year of 2009/10:

• A fully unbundled line: £85.00 to £91.00 (from £81.69 today);
• Shared unbundled line: £15.60 to £16.20 (from £15.60 today);
• Residential wholesale line rental: £100.68 and £104.40 (from £100.68 today);
• Business wholesale line rental: £106.00 and £110.00 (from £110 today); and
• Other related charges adjusting in line with underlying cost increases.

Ofcom has also proposed charges for unbundled lines for 2010/11. Full details can be found at: Details of Ofcom proposals

The consultation also considers how these charges might evolve over the next four years. Ofcom aims to have the new charges in place by April 2009.

The consultation can be found at: http://www.ofcom.org.uk/consult/condocs/openreachframework/

Ends.

NOTES FOR EDITORS

1. There are two types of unbundling: full unbundling, where a communications provider takes over the line to provide broadband and telephone services; and shared unbundling, where a communications provider shares the line with BT for the provision of broadband only.

2. Openreach was created in January 2006 after Ofcom accepted legally-binding Undertakings from BT Group plc, rather than referring the company to the Competition Commission. This resulted in the creation of Openreach as an operationally separate business unit which provides wholesale access telecoms services to all communications providers on an equivalent basis.

3. The consultation covers Openreach’s main services which are:

• Wholesale Line Rental (WLR) – used by communications providers to offer telephone services to consumers over the BT network.
• Local Loop Unbundling (LLU) – which allows communications providers to install their equipment in BT’s telephone exchanges to offer their own retail services including broadband.

4. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services.

5. For further information about Ofcom please visit: www.ofcom.org.uk. Ofcom’s news releases can be found at: www.ofcom.org.uk/media/

Source: Ofcom, 5th December, 2008