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Ofcom to impose price cuts on BT line rental

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By Barry Collins

Posted on 6 Feb 2012 at 09:00

Telecoms regulator Ofcom is forcing BT to lower the prices it charges other communications providers for line rental.

The new price restrictions are being imposed on BT's wholesale access division, Openreach, and could potentially see the price of broadband services reduced.

Under the new proposals, BT Openreach will only be allowed to charge £87.41 per year for a "fully unbundled" line - where an ISP provides both broadband and telephone services - down from the current £91.

The cost to ISPs of a "shared unbundled" line - where they only provide the broadband part - will fall from £14.70 to £11.92 per year.

Finally, the cost of wholesale telephone line rental will drop from £103.68 to £98.91.

All the price cuts will take effect from the financial year 2012/13, and BT could be forced to make further price cuts in subsequent years, with Ofcom setting the prices at a fixed percentage below the Retail Price Index.

Ofcom says the price controls are necessary "because Openreach has been found to have significant market power in the delivery of these services". The final decision is expected to be published in March, once they've been rubber-stamped by the European Commission.

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User comments

.
Wow!

Almost 25p per month!

How will we contain our excitement?

By qpw3141 on 6 Feb 2012

It is overpriced

I've often wondered how BT can justify charging so much for line rental. Given you can get a mobile phone contract with a lot of minutes, texts and internet for just £10 per month, often with a choice of phone included at that price, it does seem a tad expensive in the modern age.

By skarlock on 6 Feb 2012

Mark Holding

Even if BT do drop the price to other ISP's, how can the customer guarantee that their provider will pass the price drop on! Like all company's, it's all about how much they can create for the share holder. The customer is usually the last person to benefit from such things. You only have to look at Company's like Shell who have made billions of £s, while all we see at the pumps is even higher prices! Hopefully the price cut will be passed on and create more competition across the board.

By airborne_warrior on 6 Feb 2012

Line rental is a con

In modern times many people do not use their home line for calls. It is essentially just an extra fee for your broadband connection. I wonder if they will ever offer a package where you get broadband but no call-making ability, for a lower line rental?

By Deadly on 6 Feb 2012

Investment Time

There is no point moaning on one hand that you have a slow or unreliable line and in the next breath moan about the cost. I would hope any savvy ISP would ring-fence any savings they get here for upgrading their networks.

As the last mile improves bandwidth to 5-6 times the current average, ISPs are going to have to invest serious money to upgrade their infrastructure to cope - otherwise we'll have the fastest connecting broadband in Europe but the slowest usage imaginable.

By Fraz_pro on 6 Feb 2012

So if the cost of broadband only will fall from £14.70 to £11.92 per year (PER YEAR), how come we pay in the region of that much or more PER MONTH for a broadband only service. I understand that there must be some data charges on top - but we are talking about an order of magnitude difference here - do the bytes really cost that much?

By martindaler on 6 Feb 2012

Line rental is a con - too right

...because it is used as a way of advertising misleading headline prices for 'internet' packages. Read the small print and even 'internet and phone' does not include the telephone line rental, another £150/yr non-optional extra.

Even Virgin, who CAN supply broadband without a phone line advertise their broadband package with £13.90 hidden from the true price, revealed only in the small print as 'telephone line rental'. Perversely, if you don't want the telephone line, they charge you more for the internet on its own.

By martindaler on 6 Feb 2012

@Deadly

.
Line rental is not a 'con' at all.

It pays for the line from the cabinet to your house, and a share of all the rest of the local network that is needed whether or not you make calls.

The problem comes about because ISP's like to advertise lowest price they can (in the same way they like to advertise the highest speed they can) so they frequently advertise the cost without the basic line rental.

Even suppliers that offer a calls, TV and broadband package sometimes offer a low price with an asterisk and only in the small print mention that you have to pay line rental on top of the headline price.

In fairness to them, however, it would be absurd to force them to include the line rental element since if you already have a normal telephone line then you are already paying this.

Rest assured, though, that you are not paying 'extra' for the line. The cost MUST be included somewhere but it is only included once.

By qpw3141 on 6 Feb 2012

@martindaler

.
The cost you quote for broadband is just that: the cost for broadband provision.

It is completely different to the cost of providing a line.

If a provider supplies you with an 'unbundled' line with BB they have to pay BT Openreach the small amount for broadband and a much larger amount for the line rental. You are charged for those two costs plus the cost of internet service provision plus at their end profit.

By qpw3141 on 6 Feb 2012

Yes, line rental is a con

.. . precisely because they always exclude it from the advertised price, even for packages which include 'phone'. Since they don't include it in the advertised price it is not subject to the market pressure to which headline advertised prices are subject. It is a bit like 'booking fees' and the other tosh which lo-cost airlines hide on the 8th page of their online booking procedure.
Just because there is a genuine economic fixed cost in the equation does not mean that what they present to us as 'line rental' is necessarily not a con. It is.

By martindaler on 6 Feb 2012

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