Ofcom proposals could cut broadband costs

Ethernet plug with fiber optic wire

The price of broadband and telephone services could come down, if Ofcom's proposed overhaul of the wholesale charges BT levies against other telcos goes ahead.

The regulator wants to introduce inflation-linked charge controls, dictating the amount Openreach - BT's network access division - can charge other telcos that use some of its wholesale services.

These include telephone and broadband services that are delivered using full or shared unbundled lines, and wholesale line rental provisions.

Under the proposals, the regulated wholesale price for fully unbundled lines could be up to six per cent lower than it is now per year, while the cost of shared unbundled lines could drop by eight-to-12 per cent.

The wholesale rental price would also go down by between two and eight per cent per year, Ofcom claims.

"This form of regulation provides an incentive for BT to make efficiency gains," said Ofcom in a statement.

"These proposals are subject to further work by Ofcom on quality of service and fault levels on BT's copper network."

The changes could lead to telcos paying less for BT's services, which in turn could result in lower priced broadband and telephone services for customers, if the firms decide to pass on these savings to customers.

"The proposed new prices are designed to provide incentives to invest in networks while also ensuring that broadband and landline prices are affordable for consumers," the statement continued.

"Ofcom will consult further later in the year should that work suggest any need to modify these proposals."

The news follows Ofcom's announcement earlier this month about its plans to cut the amount customers must pay when switching broadband providers.

The move would also see the minimum length of the wholesale contract between BT and the switched customer's new supplier reduced from a year to a single month.

In a short statement to IT Pro, BT said it was in the process of reviewing Ofcom's "complex" proposals. "There are a number of areas where we believe Ofcom have not fully recognised the costs of providing services," it added.

Caroline Donnelly is the news and analysis editor of IT Pro and its sister site Cloud Pro, and covers general news, as well as the storage, security, public sector, cloud and Microsoft beats. Caroline has been a member of the IT Pro/Cloud Pro team since March 2012, and has previously worked as a reporter at several B2B publications, including UK channel magazine CRN, and as features writer for local weekly newspaper, The Slough and Windsor Observer. She studied Medical Biochemistry at the University of Leicester and completed a Postgraduate Diploma in Magazine Journalism at PMA Training in 2006.