TELECOMS REGULATOR Ofcom has proposed to force BT to cut its wholesale prices of broadband and telephone lines.
Ofcom has submitted proposals to the European Commission (EC) to require BT's Openreach wholesale broadband operation to cut its prices on three of its main products. The provisional price cuts include dropping the price of an unbundled line from £91.50 to £87.41 a year and further decreases the following year.
The regulator also proposed a price cut for a shared unbundled line from £14.70 to £11.92 a year for the 2012-2013 financial year. Once again Ofcom said it wanted further price cuts the following year, choosing to apply its most aggressive charge control of RPI -15.9 per cent on price reductions.
BT's Openreach operations might also have to cut prices on its wholesale telephone line rental should the EC accept Ofcom's proposals. Ofcom proposes a drop from £103.68 per year to £98.81 for the 2012-2013 financial year, with further drops in accordance with its RPI -7.3 per cent formula.
Ofcom claimed it has the right to order BT Openreach price cuts due to its considerable market power. Given that BT's copper network is by far the biggest in the UK, just about every major ADSL provider has to deal with BT Openreach if it wants to conduct business.
The EC has 30 days to comment on Ofcom's proposals and if it approves the proposals then the new prices will be effective from 1 April 2012. While Ofcom has the ability to force BT Openreach to lower prices, it is not clear whether the wholesale price cuts will be passed on to consumers. µ