BT to lower LLU prices following Ofcom pricing error
BT have been ordered to lower the fees it charges for access to its LLU broadband services following a pricing error from Ofcom. TalkTalk, supported by Sky, raised the issue which was looked in to by the Competition Appeal Tribunal. Caps implemented in May 2009 by Ofcom were deemed too high according to the Tribunal which ruled on the case yesterday. The error stems from Ofcom's calculations on inflation and efficiency which were set at too high a level.
The tribunal ordered that Ofcom should implement new price controls "as soon as possible" which BT will be bound to comply with. Ofcom determined that the overcharge amounted to around £3.1 million for MPF and £2.1 million for SMPF, although no adjustments will be made to re-coup from the error for 2009/10.
The price adjustment to be announced by Ofcom is not expected to be very large, and indeed, once implemented consumers may see no difference in prices as any saving announced could be offset by the VAT rise due at the beginning of next year. TalkTalk also raised a similar case over pricing of WLR, but the tribunal did not find any errors with the price controls in that instance.