BT mulls appeal over Ofcom pricing proposals for Openreach

TELECOMS group BT said today it was considering an appeal after regulator Ofcom revealed plans to reduce the amount the company can charge rivals to rent lines.

The communications regulator has proposed cuts of up to 19% in the amount that BT’s wholesale network, Openreach, which owns the majority of landlines in the country, will be able to charge from April, with further decreases the following year.

This is the third time Ofcom has set the prices that Openreach charges other companies for using its lines and its proposals are expected to benefit BT’s rivals such as TalkTalk and Sky, who may choose to pass on the lower costs to consumers.

However, BT said it was considering appealing against Ofcom’s decision because it disagrees with the way it had done its calculations.

BT said it needed to get a “fair” rate of return if it was to continue investing in the UK’s infrastructure. It is currently rolling out superfast broadband to two-thirds of the population by 2014, and last week announced plans to offer “ultra-fast” speeds.

A BT spokesman said: “Whilst the prices are within the range outlined by Ofcom in November, we disagree with some of the underlying assumptions that they have used to determine these charge controls.

“Our primary concern throughout this process is to ensure 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.”

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Ofcom’s plans would see the amount BT can charge for a telephone and broadband line fall 4.5%, from �91.50 to �87.41 for the year 2012-13, with a further fall of 5.9% below RPI inflation the following year.

The cost of using a broadband line only should drop 18.9% in the coming year, Ofcom has proposed, from �14.70 to �11.92, with a further fall of RPI minus 15.9% the year after, and wholesale line rental, used by communications providers to offer telephone services to consumers using lines rented from Openreach, would fall 4.7% from �103.68 per year to �98.81 for 2012-13 and by RPI minus 7.3% the following year.

Ofcom has submitted the proposals for approval by the European Commission and is due to publish its final decision early next month. Ofcom regulates the prices BT can charge because it has “significant market power”.

Last week, BT said that its underlying profits for the three months to December 31, the third quarter of its current year, had increased by 18% to �628million.

It announced announced that, following a successful trial, it would offering “ultra-fast” speeds of up to 300MB by next spring, in areas where “superfast” services have already been rolled out.