Thursday, January 20, 2011

UK - Regulator has modified incumbent operator's wholesale pricing with a view to reducing retail prices

[it pro] Ofcom has forced BT to cut its Wholesale broadband prices in areas where it is the sole provider of internet connectivity.

By lowering the cost of leasing BT’s broadband infrastructure, Ofcom hopes to encourage more competition from retail internet service providers (ISPs) in the often rural areas and to pass on cost savings to the consumer.

The regulator has proposed price cuts of between 10.75 per cent and 14.75 per cent below inflation.

“Ofcom’s aim is to incentivise BT Wholesale to continue to improve its efficiency,” said a statement from Ofcom. “This could make it cheaper for other communications providers to roll out services and should ultimately benefit consumers in those areas through lower prices.”

The price cuts could influence up to three million homes in the UK – 12 per cent of all households – in areas such as the South West, Norfolk, Yorkshire, Cumbria and Northumberland, as well as remote areas in Scotland, Wales and Northern Ireland.

Ofcom also hoped the changes would help improve broadband speeds as ISPs would be able to buy more capacity. It also confirmed it would exclude ADSL 2+ connections from the price cuts, encouraging BT to invest in the new technology that could carry much faster speeds over copper networks.

The new pricing is set to come into effect in the summer.

Ofcom orders BT Wholesale price cuts

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