BT is likely to enjoy lighter controls on the amount it can charge for its leased lines in London, under proposals revealed by Ofcom on Monday.
Leased lines offer high-end fibre connectivity as a retail product for business customers, and also as a wholesale product for smaller telcos that resell fixed and mobile broadband services. In the telecoms regulator's latest Business Connectivity Market Review — the first in four years — Ofcom said the market in London for leased lines had become more competitive recently.
In the 2008 review, Ofcom had demarcated an area in central and east London where BT was allowed more flexibility than elsewhere in setting its 'wholesale Ethernet' rates. That area has now expanded to take in much more of the city.
"London benefits from a substantial, competitive fibre infrastructure, in a wider geographic area than previously found. This has allowed Ofcom to propose significantly extending the deregulated area for legacy high-speed networks westwards towards Heathrow," Ofcom said in a statement.
There are only two areas in the UK where BT does not have what the regulator calls 'significant market power' — the parts of London Ofcom referred to on Monday, and Hull, where BT has no presence and KCom reigns supreme.
Apart from these two areas, Ofcom is proposing to impose heavier restrictions on what BT can charge for 'very high-bandwidth', wholesale leased lines — those offering speeds of more than 1Gbps.
The regulator has also proposed deregulating the market for "longer distance legacy leased lines", and forcing BT to offer its regulated Ethernet services "on the same basis to all retail providers".
The proposals do not directly lay out specific price caps for BT, as that will happen in a separate document later in the year. However, BT has already reacted to the broader proposals, saying it was "disappointed" that Ofcom still thought BT has significant market power in the "very competitive high bandwidth market".
"However, we welcome Ofcom's intention to simplify and add certainty to pricing in the business markets, as well as their recognition of greater competition in London," BT said. "We will continue to engage with Ofcom and other stakeholders throughout this consultation process."
Ofcom's consultation closes on 24 August.