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Ofcom notifies EU of new Openreach charge controls
Monday 06 February 2012 10:24:46 by Andrew Ferguson

The charge controls that Ofcom imposes on operators with significant market power have changed slightly in how they operate. UK stakeholders will now get chance to respond to any proposed changes first, followed by a seperate consultation with the European Commission, previously the UK and EC consultations ran at the same time.

Pending final approval from the European Commission we now know the prices for various Openreach products, that are crucial to how providers like Sky, TalkTalk, O2 and the myriad of WLR voice providers operate. In general the prices for 2012/2013 are to be lower, with further decreases in 2013/2014 assuming the Retail Price Index remains relatively low.

Service Current charge Annual charge for 2012/2013 Change Charge control for 2013/2014
MPF Rental £91.50 £87.41 -£4.09 RPI-5.9%
SMPF Rental £14.70 £11.92 -£2.78 RPI-15.9%
MPF Single Migration £39.79 £33.54 -£6.25 RPI-11.3%
MPF New Provide £52.79 £51.16 -£1.63 RPI-14.2%
SMPF Single Migration £39.79 £33.54 -£6.25 RPI-11.3%
SMPF Provide £39.79 £33.54 -£6.25 RPI-11.3%
WLR Rental £103.68 £98.81 -£4.87 RPI-7.3%
WLR Transfer £3.09 £3.29 +£0.20 RPI
WLR New Connection £48.22 £50.06 +£1.84 RPI-10.2%

While the broadband market is moving away from copper towards fibre, for the vast majority of telephone lines in the UK, the copper access element will remain in use for telephone services. So while MPF (full LLU) providers like TalkTalk and Sky will see the number of ADSL2+ connections reduce to their MSAN, they will continue to terminate the voice side on the MSAN, as this is cheaper than Wholesale Line Rental (WLR) and MPF gives them better control. For LLU providers who continue to provide a WLR (Voice) and SMPF (xDSL) product the pricing is still pretty unattractive, e.g. base costs are £87.41 for voice and xDSL to Sky, but are £110.73 per year for O2.

Migration charges are generally amortised across the contract term, so as with the other charges we don't expect to see price cuts at the retail level. The changes though are such that it may allow some providers to continue with price freezes while the two biggest names BT Retail and Virgin Media continue with their annual price increases for their voice products.

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