BT faces lower limit on line rental charges

The telecoms regulator Ofcom has come up with new draft caps for how much BT Openreach can charge other ISPs for its wholesale line rental and for local loop unbundling.

The reduced rates may lead to lower retail prices for consumers and businesses. Ofcom said on Monday that it had notified the European Commission of the provisional charge controls on Friday, as required in new EU telecoms rules that were transposed into UK law last May.

Under the new caps, the wholesale price Openreach can charge other ISPs for normal line rental would go down from the current £103.68 annual rate to £98.81 for the 2012/13 financial year, ending in March 2013. As with all the caps announced on Monday, this is expected to decrease further in the next year, ending in March 2014.

ISPs that resell BT's connectivity sometimes 'unbundle' lines, meaning they take over the management of the line between the customer's premises and the nearest BT exchange, where they also install their own kit. This practice is known as local loop unbundling (LLU).

At the moment, Openreach charges other ISPs £91.50 each year per fully unbundled line. Ofcom wants that taken down to £87.41 for 2012/13, then further afterwards.

Where an ISP is only unbundling a proportion of a customer's line for providing broadband, the current wholesale price is £14.70 a year. Ofcom wants this to drop to an annual fee of £11.92, then further for the year ending in March 2014.

Ofcom regulates how much BT Openreach can charge because — with the exception of the anomaly that is Hull — BT has traditionally controlled almost all the UK's telecoms infrastructure, putting it in a dominant position.

The regulator said it expects to publish a final decision on the new caps in March, once the Commission has had a look at it.