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When Openreach was created in January 2006, Ofcom agreed the maximum prices that it could charge for its main services. These charges did not include an annual adjustment for inflation or other cost movements and the regulator agreed to review the charges at a future date.

Openreach's main services comprise wholesale line rental, which enables other telcos to provide telephone services over the BT network, and LLU.

LLU is now widely used by ISPs to install their own equipment in BT's telephone exchanges, either to provide broadband and telephone services

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(full unbundling) or to share the line to provide broadband access while BT remains the telephone operator (shared unbundling).

Ofcom said that the review is designed to sustain and promote efficient competition in the provision of telecoms services while continuing to encourage investment and innovation.

Since the charges were first set there has been a significant increase in direct competition in the provision of both telephone lines and broadband services, the regulator said, with more than four million unbundled lines in the UK.

The consultation will be in two stages. The first consultation does specify suggested pricing levels, but examines the current and expected changes in underlying costs, service volumes, expectations of efficiency gains and the effects of new pricing arrangements on competition. The second consultation - due later in the year - will set out more detail on the proposed new charges.

Ofcom aims to publish its conclusions before the end of 2008.