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Ofcom wants BT to reduce wholesale prices

Move could reduce home phone and broadband prices by year end

By CBR Staff Writer

UK telecom regulator has proposed a revision of rates that BT’s network manager Openreach charges other providers. The move could eventually lead to reduction of cost of home telephone and broadband services in the UK by this year end.

Ofcom has proposed that that BT should lower its wholesale prices for its Openreach landline and broadband services in two ways: Local Loop Unbundling and Wholoesale Line Rental.

The reduction of changes would be applied after taking inflation into consideration.

The proposals if accepted means the wholesale price could fall by more than 10% per year. The reduction is expected to benefit companies such as TalkTalk and Sky, but not Virgin Media which uses its own network.

Ofcom believes the benefits will be passed on to the consumers.

The regulator said, "Ofcom expects its proposed prices to lead to real term price reductions for consumers, as communications providers pass on savings to their landline and broadband customers."

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However, BT has raised concerns over the proposal and issued a statement saying that it needs to get a fair rate of return for its investments.

BT said, "BT invests more than any other company in the UK’s communications infrastructure, so it is critical that it is able to achieve a fair rate of return in order to continue its investment in copper and fibre-based services."

The company said that it would discuss its concerns with Ofcom during the consultation process.

If the proposal is accepted consumers could see a reduction in price towards the end of 2011.

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