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Ofcom submits BT price-cut plans to Europe

25 Feb 2013
Fibre broadband strands

Broadband and mobile phone contracts could drop in price in the coming years for both businesses and consumers if the European Commission (EC) approves price cuts on BT's network services put forward by Ofcom.

The UK telecoms watchdog wants to cut the prices BT can charge internet services providers and mobile operators for accesses to its Ethernet back-haul networks that is used for transmitting vast amounts of internet traffic around the UK.

Ofcom first announced its intention to cut this pricing last year as part of its Business Connectivity Market Review, which it carries out every three years, before opening a consultation on the plans.

On Monday, Ofcom confirmed it has submitted its proposals to the EC. These include reducing the cost BT can charge for access to its very high bandwidth lines over 1Gbit/s, as the firm has significant market power in this area, according to Ofcom.

It also wants to reduce the prices BT can charge for access to its Ethernet services outside London by 11 percent below inflation over the next three years. This is down on the 12 percent price cut originally proposed.

Within the London area BT is seen to have enough competition for the market to fairly dictate prices, so regulation will be relaxed in these areas.

Ofcom is hoping the move helps encourage other operators to move away from slower legacy services run by BT, which traditionally hit a top speed of around 622Mbit/s, and move to faster Ethernet services closer to 1Gbit/s that are also more efficient to use and cheaper to maintain.

BT said it was disappointed with the decision, claiming it believed it had made a compelling case that no more regulation was needed.

"We believe Ofcom's decisions to regulate very high bandwidth Ethernet and optical services outside of London for the first time is mistaken; we provided clear evidence to Ofcom that the market is highly competitive and that there is no market failure that needs regulatory intervention," it said.

"We also believe Ofcom could have gone further in deregulating legacy retail services; newer, more efficient alternatives now exist removing the need for the regulation of such legacy services altogether."

The move will no doubt be welcomed by the firm's rivals, though, particular as it's dominating the tendering processes for government funds for rollouts in remote regions.

BT also splashed out £186m for 4G services last week in a move that appears designed to help it offer mobile coverage in urban areas.

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Dan Worth

Dan Worth is the news editor for V3 having first joined the site as a reporter in November 2009. He specialises in a raft of areas including fixed and mobile telecoms, data protection, social media and government IT. Before joining V3 Dan covered communications technology, data handling and resilience in the emergency services sector on the BAPCO Journal

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