Telecoms watchdog bares its gums

A decision by Oftel not to push for further price cuts in BT's wholesale products has disappointed, but not surprised, rival telcos.

The telecoms regulator is due to release its review on broadband regulation next month.

But, according to a report in the Financial Times, it will not contain any sweeping changes to the way BT is allowed to charge its customers.

Oftel believes that ordering BT to further lower costs will deter it from investing in new technologies and hinder the continued roll-out of broadband, the FT article said.

BT dropped its wholesale prices earlier this year, but ISPs are calling on Oftel to tackle the way BT is allowed to set its prices.

The telco is currently allowed to charge on the 'retail minus' model, whereby the regulator looks at what it charges competitors to see whether prices can be lowered.

But ISPs argue that moving to the more aggressive cost-based pricing regime, based on what it costs BT to provide a service plus a reasonable profit, would substantially lower costs.

ISPs also want the telecoms regulator to look at activation and migration costs, which they maintain are too high.

"We are not expecting Oftel to tackle the issue of 'retail minus' versus cost-based pricing models as it is only a couple of months before it shuts up shop," said Steve Horley, Tiscali's general manager for access and voice.

"However we are disappointed that it makes no mention of activation and migration costs, and we will be asking the successor body, Ofcom, to pick up these issues."

Oftel confirmed that the FT report was based on a briefing by the regulator's director general Dave Edmunds.

But it insisted that the article's conclusions were "merely speculative" and refused to comment until the broadband review next month.