Ofcom wants price cuts to kick-start LLU

27 Aug 2004

The UK telecoms watchdog Ofcom has unveiled its proposed pricing structure for local loop unbundling, with some charges being slashed by more than 70%. The regulator is hoping that the price cuts will provide a boost for LLU in the UK, where just 16,000 of the incumbent BT’s 25 million lines have been handed over to competitors. Ofcom wants one million lines to be unbundled by 2005-06 so alternative telcos and ISPs can offer services such VoIP calls, broadband internet access and video-on-demand TV services.

Earlier this year BT proposed its own cuts to the fees it charges rivals for transferring local connections. While Ofcom praised the move, it was felt that the telco had not gone far enough so the regulator launched its own pricing review.

In the case of shared access lines Ofcom has broadly agreed with BT’s proposals for a 70% price cut; the watchdog wants connection costs to fall 68% to GBP37.03 and rental charges lowered by 76% to GBP12.64. For fully unbundled lines Ofcom has gone beyond BT’s planned 15% reduction, calling for a 42% cut in the GBP88.00 it costs to transfer a line and a 27% decrease in the GBP265.00 cost of providing a new connection.

The regulator has yet to decide on the rental tariffs for fully unbundled lines, saying it is running a separate analysis, the results of which will be announced next year. In the meantime, BT’s current charge of GBP105.00 per year will continue to apply. BT has said that though the price cuts are more than it had expected it will work with them

United Kingdom, BT Group (incl. Openreach)