UK broadband prices set to fall following Ofcom changes

6 Feb 2012

Broadband prices in the UK are set to fall as a result of new changes proposed by regulator Ofcom that will affect wholesale provider Openreach.

To facilitate fair broadband and telecoms competition, Openreach provides telecoms operators in the UK with access to BT’s unbundled local loop network (LLU).

Under a draft decision, subject to the outcome of the European Commission’s new consultation process, the new controls will see prices charged by Openreach to other operators fall from stg£91.50 per fully unbundled line to stg£87.41 in 2012 and fall further in the following year.

A shared unbundled line into a property where a proportion of the line is used for broadband, the price will fall from stg£14.70 per year to stg£11.92, with a further fall expected next year.

Wholesale line rental for telephone services is set to fall from stg£103.68 a year to stg£98.81.

A final decision is expected in March.

The wholesale model by Openreach is largely considered a success in enabling a competitive broadband market in the UK, in which incumbent BT competes on equal terms with other licensed operators.

In the Republic of Ireland, however, weak regulation on wholesale broadband and LLU has adversely affected competition in the local market and less than 5pc of lines are fully unbundled as a result.

Openreach was created in 2006 when BT created an operationally separate business unit to provide wholesale access to its network.

The company functions as a standalone entity and serves more than 400 service providers in the UK and Northern Ireland.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years