BT stung by Ofcom proposals

Ofcom has proposed a new range of prices that BT Openreach can charge providers to use its network, which are nowhere near as high as BT had hoped.

BT’s Openreach was set up almost three years ago, creating competition between telecoms companies by allowing anyone to take control of BT’s phone lines. 5m lines have since been unbundled and rented out to rival companies, however BT maintains that the prices it may charge for the lines are too low.

Ofcom said that the new prices, which include £85 to £91 for a fully unbundled line and £15.60 to £16.20 for a shared unbundled line, would help to improve competition among telecoms providers.

Ofcom intends to put the new charges in place by April, and will consult with industry before they are finalised. BT insiders have expressed frustration with the amount of time the regulator is taking over the issue, as initial proposals were published in May.

“Out in the real world it’s pretty nasty at the moment and Ofcom seem to be operating in a bit of a bubble,” said one insider.

The proposals have increased concerns about BT’s willingness to spend billions on a next generation broadband network, as the provider has already expressed doubts about making a reasonable return on the investment.

“This is an important issue for the economic health of the UK,” said Steve Robertson, who runs BT’s networks division, Openreach. “BT invests more than anyone in the UK’s communications infrastructure and so it is critical that it is able to achieve a fair rate of return.”

BT chief executive Ian Livingston has already warned that some of his shareholders want him to halt plans to spend £1.5bn connecting 10m homes to super-fast broadband because of the recession.

A spokeswoman for Ofcom stressed: “If BT now decides to reconsider its four-year plan for investment in fibre for super-fast broadband, that is a separate and entirely commercial matter for the company and nothing to do with today’s announcement.”

Share with others...