Ofcom orders ceiling on local loop unbundling rental

Telecoms and media watchdog Ofcom has ordered that BT can charge competitors no more than £81.85 rental per year for a totally unbundled local loop. However, BT had already pre-empted the move last month.

On 1 August 2005, BT slashed its fully unbundled rental charge from £105.09 to £80.00 a year a cut of over 20 per cent. However, Ofcom says it has not been wrong footed and says that it is still important to set the price ceiling so that BT’s charging structure is transparent and that it is not possible for BT to increase the charges ‘to an excessive level’.

The latest price cuts have been part of continuing pressure to force BT to lower its LLU prices to competitors.

As of the beginning of this year, BT implemented a number of price cuts for its Local Loop Unbundled services. The company implemented overall reductions of 70 per cent for line sharing 29 per cent for a new fully unbundled line and 33 per cent for a fully unbundled transfer compared with prices as they stood in May 2004.

However, despite the price cuts, things have not been going as smoothly on the ground. Earlier this year the Telecoms Adjudicator found that BT was dragging its feet over LLU and ordered it to speed up the programme.

More to BT’s liking is the announcement by Ofcom that BT can offer a deal to its largest customers rather than sticking to a fixed tariff. At the moment BT must offer all large business customers the same published call and line charges. Under new Ofcom’s proposals, BT would be allowed to agree individual terms with business customers spending more than £1 million a year on telecommunications services without having to publish its prices. To guard against predatory pricing, competitors are to be allowed to at least try and match BT’s offer before any deals are signed.

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