Ofcom has put forward proposals that would limit the price BT can charge for access to its wholesale leased line services, in a move that could see bills fall for companies and consumers.
BT provides access to its backhaul infrastructure for use by organisations such as businesses, universities and other communications providers to carry the bulk of data traffic on heavy-duty lines. Some £2bn is spent on access to these lines every year.
Ofcom believes that BT has "significant market power" across the UK for these services, except in London and Hull where other operators offer rival services.
As such, the regulator believes that price controls are needed to ensure that buyers get a fair price.
Ofcom has split these new proposals into two ‘baskets’ which focus on the older ‘traditional interface’ lines leased by BT and its newer Ethernet services which offer much faster data transfer speeds.
Ofcom said the price reducations will be based on a charge control and the consumer price index (CPI).
So for example, if Ofcom choose a charge control of 12.25 percen and the CPI on 1 April 2016 is two percent Ofcom would calculate the reduction as two percent - 12.25 percent leaving 10.25 percent - this would be the amount prices reduce by in 2016.
The regulator estimates that these caps would see prices fall for three years starting in April 2016.
BT said that it will respond to Ofcom’s proposals and, perhaps unsurprisingly, that it is against yet more regulation governing how it sells access to these services.
“We believe there should be less regulation in this market, not more, as businesses already have a diverse and growing choice among a large number of providers,” BT said in a statement sent to V3.
“More regulation could discourage future investment in the UK's telecoms infrastructure.”
The full details of the Ofcom consultation are available online now and the closing date for responses is 31 July 2015. Ofcom expects to make a final decision in the first quarter of 2016.
The dark side
Ofcom has also issued an update to its proposals from last month relating to BT's so-called dark fibre network which would allow competitors to have physical access to BT’s fibre-optic cables and take direct control of the connection.
Ofcom has now proposed that the price of dark fibre access should be based on BT's existing 1Gbit/s Ethernet products, for which BT provides the electronics minus the cost of those electronics.
The consultation issued today also provides guidance on how Ofcom believes these costs would be calculated.
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