BT remains unhappy as Ofcom sets reduced Openreach prices

News 7 Mar, 2012

The regulator cuts the amount Openreach can charge for its wholesale infrastructure, as BT considers an appeal.

Ofcom has set the reduced Openreach wholesale prices a href="http://www.itpro.co.uk/638695/bt-considering-ofcom-price-cap-appeal" target="_blank"]announced last month[/a], but BT says it is still considering appealing.

The communications regulator took its revised prices to the European Commission in February and they have now been confirmed.

The changes mean BT will have to charge competitors less for use of its broadband infrastructure, which would mean customers will get reduced bills too if operators decide to pass on the benefits.

For fully unbundled lines running from the cabinet to a property, where ISPs rent the line to provide broadband and telephone services, Ofcom wants Openreach to cut prices from £91.50 to £87.41 for the financial year 2012/13.

We continue to disagree with some of the underlying assumptions they have used to determine these controls.

For wholesale line rental, where providers take over the whole Openreach line to provide services, the price would go down from £103.68 per year to £98.81.

Where ISPs are renting the line between the cabinet and the premises solely for broadband, the cost would drop from £14.70 per year to £11.92.

As BT said last month, it would consider an appeal.

“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,” a spokesperson said.

“Now that we have received Ofcom’s final decision, we will consider all options available to us, including appealing.”

When Ofcom made the announcement last month, it said BT’s pricing did not meet some of its requirements.

“We have a model which has various inputs going into it and we reach our conclusions based on the inputs that are going into that model,” a spokesperson said.

“The main ones are cost of capital, volume of lines we forecast Openreach to be serving over a certain period and also the rate of efficiencies that BT Openreach will make going forward as well. They are the three main components. Based on our analysis, we set our draft controls.”