Ofcom seeks reduction in BT leased line wholesale charges

Ofcom plans to require BT to cut its wholesale charges for leased line services providing high-speed

Ofcom plans to require BT to cut its wholesale charges for leased line services providing high-speed data links. Photo: Adam Liversage / BT - Credit: Archant

BT faces a demand from regulator Ofcom to slash the cost of the wholesale prices it charges for “leased line” services providing high-speed data links.

The plans relate to the way the telecoms giant leases lines to businesses and providers of superfast broadband and mobile services.

Ofcom said its plan should lead to significant real-terms price reductions for most customers of the market, including firms, schools, universities and libraries.

It said consumer mobile and broadband operators, which use the leased lines to transfer data on their networks, would also see savings which could be passed on to customers.

The proposals come after Ofcom said last month that BT has “significant market power” in much of the leased line market and that charge controls should be imposed to protect buyers of these products.

BT has already clashed with the regulator over previous plans for it to open up the network. Details of the charge controls set out today propose that the telecoms giant must cut charges every year for three years from April 2016.

For older “traditional interface” technology at slower speeds, annual charge changes will be capped at a level between Consumer Price Inflation (CPI) minus 6.25% and CPI minus 14.25%, meaning price cuts every year.

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High-speed “Ethernet” service charges would see steeper falls, with the cap somewhere between CPI minus 9.75% and CPI minus 17.75%.

Ofcom’s proposals are published in a consultation today which closes at the end of July. Its final decisions are expected to be published in the first quarter of next year, taking effect from April 1.

BT said: “These are proposals for discussion, so we’ll be making our views known to Ofcom. We don’t expect a final decision for some time.

“We believe there should be less regulation in this market, not more, as businesses already have diverse and growing choice amongst a large number of providers.

“More regulation could discourage future investment in the UK’s telecoms infrastructure.”

Today’s announcement comes a month after BT clashed with the regulator over proposals that it must open up its high-speed “dark fibre” network to direct access by rivals, to promote competition in the leased line market.

It currently sells wholesale leased line products using its fibre-optic network as well as its network equipment, to other operators.

But the “dark fibre” plans from Ofcom would allow the connections to be “lit” by other companies with their own equipment rather than BT’s.

BT said at the time that the way the market currently operates already created a level playing field and the new plans would favour a few large companies to the disadvantage of others. It also said the proposals would undermine investment.

The telecoms giant has been facing flak from competitors over the way it controls the lion’s share of the UK’s telecoms network through its Openreach division, which some rivals say ought to be split off.