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22|05|09

Ofcom confirms new wholesale prices for Openreach

Ofcom today confirmed the new prices that Openreach, a separate division within BT Group plc, can charge communication providers for access to its wholesale telecoms services.

Today's announcement relates to charges for lines which deliver telephone and broadband services to homes and businesses over its copper network in a process called local loop unbundling.

Nearly six million lines already unbundled in the UK

In three years, the number of "unbundled" lines has increased from 123,000 to 5.84 million, offering consumers more choice and better value for money.

The spur for this was a set of legally-binding Undertakings that Ofcom agreed with BT Group which led to the creation in 2006 of the operationally-separate BT business unit Openreach.

In 2006 Ofcom also set the maximum prices that Openreach could charge for its wholesale services. These charges did not include an annual adjustment for inflation or changes to other costs. In light of changing economic and commercial conditions, Ofcom has decided it should now amend these charges to reflect cost changes arising from this. 

New prices for sustainable competition

These new prices cover Openreach's wholesale unbundled line services to homes and businesses. They are designed in particular to promote continued competition in the provision of voice and broadband services and to ensure that Openreach has the appropriate incentives to invest in delivering the services required by its customers.

Ofcom is setting the following prices for annual rental charges from 22 May 2009 until April 2010:

1. A fully unbundled line, where a communications provider takes over the line to provide broadband and telephone services: £86.40 (from £81.69);
2. A shared unbundled line, where a communications provider shares the line with BT only for the provision of broadband: £15.60 (which has not changed from the current charge);
3. Other related charges adjusting in line with underlying cost increases.

Ofcom is also setting the basis of charges for unbundled lines for 2010/11.

Following responses from stakeholders, Ofcom has decided not to set new prices for wholesale line rental (WLR) prices until it has concluded its current wholesale narrowband market review and will publish a further consultation on these prices shortly.  WLR is used by communications providers to offer telephone services to consumers over the BT network.

Ofcom Chief Executive Ed Richards said: "The new prices will enable Openreach to earn a fair return whilst allowing continued strong consumer take-up of broadband at competitive prices".      

See Related Items for the full statement.

Ends.

NOTES FOR EDITORS

1. The statement covers Openreach's Local Loop Unbundling (LLU) service which allows communications providers to install their equipment in BT's telephone exchanges to offer their own retail services including broadband.
2. Openreach was created in January 2006 after Ofcom accepted legally-binding Undertakings from BT Group plc, rather than referring the company to the Competition Commission. This resulted in the creation of Openreach as an operationally separate business unit which provides wholesale access telecoms services to all communications providers on an equivalent basis.

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