BT’s broadband prices under fresh scrutiny

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Ofcom which is the UK Regulator is considering a proposal to cut the charge for BT leased telecom lines. This will benefit consumers who buy them by passing over significant price cuts

This will include schools, universities, libraries and broadband operators. Ofcom confirmed that it was likely that savings would be passed onto consumers.

Ofcom carried out an independent review which found that the former state monopoly currently had significant market power. BT confirmed that such sanctions would possibly damage investment in infrastructure.

BT confirmed that the current proposals were to be discussed and views would be made known to Ofcom. BT also confirmed that any decision would not be imminent.

The consultation which is currently being run until July will also consider forms of charge control with the aim to reduce prices over three year duration.

The charge controls relate to two groups of services which include older leased lines which offer a speed of up to 8MBPs and new Ethernet lines that offer much faster speeds of up to 1GBP

The traditional slow speed of up to 8Mbps leased lines unlikely to help mobile and broadband operators. The Ethernet sector is the real market where such price reductions will be greatly received by those buying the lines.

There will however be the risk of BT increasing prices elsewhere if one area of revenue is reduced. In its recommendations Ofcom has proposed that companies that provide leased lines should be granted access to BT networks. This process is known as dark fibre and would allow BT to give its competitors access to its fibre –optic cables which would then allow companies to take direct control of the connections.

The name dark fibre is given as the cable is not lit by BTs electronic equipment. Ofcom confirmed that any price cuts would come into effect in 2016 once a decision had been made.

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