Ofcom says BT's Openreach should lower its costs for providers using its network

Ofcom proposes broadband price cuts

Prices for broadband and landline services could fall after Ofcom said that BT should cut its wholesale price.

It has proposed lower prices for BT's Openreach division, which provides wholesale access for other communications providers.

The proposals will affect two aspects of the BT business; the Local Loop Unbundling (LLU) service which allows communications providers to install their own equipment in Openreach's exchanges, and the Wholesale Line Rental service which allows providers to rent lines from BT.

Under the proposals, the price for a line to a property for a provider using its own equipment will fall between 1.2 per cent and 4.2 per cent below inflation every year, while the price of a rented line will fall between 3.1 per cent and 6.1 per cent every year.

The move would benefit companies such as TalkTalk and Sky which uses BT's network, but not Virgin Media which has its own cable network.

"Ofcom expects its proposed prices to lead to real term price reductions for consumers, as communications providers pass on savings to their landline and broadband customers," the regulator said.

Ofcom will now launch a consultation on the proposal and hopes to publish a statement in the autumn when it will settle on an exact price within the ranges announced, while BT said it would raise its concerns during the consultation process.

BT said: "BT invests more than any other company in the UK's communications infrastructure, so it is critical that it is able to achieve a fair rate of return in order to continue its investment in copper and fibre-based services.

"Upon initial review, we are encouraged by Ofcom's recognition of this fact, but would question some of the underlying assumptions being used."

Any price changes resulting from the consultation would come into effect towards the end of this year and be in place until March 2014.

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