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Ofcom cuts broadband prices, may lead to cheaper Internet

updated 03:15 pm EDT, Thu March 31, 2011

Ofcom broadband price cuts could lead to savings

UK telecommunications industry regulator Ofcom has revised the rates that Openreach, manager of BT's network, is able to charge other providers for using its services. This wholesale price could be reduced by over 10 percent per year. Companies that use Openreach, like TalkTalk and Sky, will benefit, but it won't help those such as Virgin Media that use their own cable network.

Ofcom proposals will see discounts to access the network in two ways. One is called Local Loop Unbundling, which allows companies to exchange equipment and take over lines to customers. If Ofcom completes the cuts, what Openreach charges when an operator takes this option will drop by between 1.2 and 4.2 percent every year. Shared lines should drop between 11.6 and 14.6 percent every year. About 7.6 million unbundled lines exist in the UK.

The other method is called Wholesale Line Rental and involves providers renting lines from Openreach. Ofcom said these prices will drop by between 3.1 and 6.1 percent every year. The UK now has nearly 6.14 million WLR lines.

With inflation applied to the price changes, some may increase depending on the rate. Ofcom is confident the changes will equate to savings for consumers, as providers will pass them on.

BT has some issues with the assumptions Ofcom used in its calculations. Ofcom is undergoing a consultation process that's due to end on June 9, with BT saying it will raise concerns with the watchdog during this period. A result of this will be made public this fall.

End users of broadband and landline connections would see the price changes come in near the end of 2011 and last until March 2014. [via BBC]

by MacNN Staff



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