Ofcom proposes reduction in wholesale prices for BT broadband

Businesses and consumers could benefit if savings were passed on

Communications regulator Ofcom has launched a consultation aimed at reducing the price of BT's wholesale broadband services.

Openreach, BT's wholesale access division, allows communications providers to install their equipment in its telephone exchanges to provide broadband to their customers for a price.

This is typically referred to as local loop unbundling (LLU), and underpins the competitive provision of broadband services in the UK.

Under the proposal, the price of a fully unbundled line to a property, where a provider takes control over the whole line to provide broadband, would decrease in real terms by between 1.2 per cent and 4.2 per cent every year.

Prices for this currently stand at £89.10 per year.

The price of a shared unbundled line to a property, where a provider uses just a proportion of the line for the provision of broadband, would decrease in real terms by between 11.6 per cent and 14.6 per cent every year.

The current price today is £15.04 per year.

Ofcom says that it regulates BT's wholesale broadband prices because BT "has been found to have significant market power in the delivery of these services".

Ofcom aims to publish a statement on the consulation in autumn 2011. It expects the annual rent charges to run until 31 March 2014.