Ofcom issues price guidance for line rental products
The price of voice line rental and its effect on broadband costs have been in a state of flux and Openreach in February issued some interim pricing which meant a substantial rise in the cost of fully unbundled line rental but now Ofcom has published its charge controls for the period 2014 to 2017.
|Service/Basket||Charge as of 31/3/14||Charge as of 1/7/14||Charge control for 2015/16 to 2016/17|
|MPF Rental per year (Full LLU)||£83.92||£86.10||CPI+0.3%|
|SMPF Rental per year (shared LLU)||£9.89||£5.54||CPI-33.4%|
|WLR Rental per year||£93.32||£91.04||CPI-3.0%|
So compared to the prices charged between 1st April 2014 and 1st July 2014 (MPF £96.37 and WLR £96.17) the new charges are a significant fall but given that in previous years there has been wholesale price falls but the retail prices still increased we are not expecting 2014 to be any different. As with many industries, retail prices are fast to rise but slow to fall.
The incentive to continue using full LLU will continue for Sky and TalkTalk, but we would have loved Ofcom to introduce some form of naked DSL option, even if only £5 to £10 a year cheaper than the other options it would have allowed for more creativity in the retail market. One reason we think it has not appeared is that the big broadband retailers are keen to retain an active voice line for the incremental revenue it generates.
Update The BT Group has issued a statement about the raft of measures announced by Ofcom.
"BT welcomes the conclusion of this review which recognises the link between improved customer service levels and the price of Openreach’s wholesale copper products for the first time.
Openreach is committed to improving its customer service levels so we support the new targets outlined by Ofcom today. The creation of a further 1600 engineering jobs over the course of this year will help us to continue to meet or exceed these standards. We have also stated that we will publish regular performance data on the Openreach website from this summer to increase transparency.
Regulation needs to reflect the level of competition in the market so it’s only right that Ofcom is levelling the playing field by largely removing the artificial price difference between the wholesale products consumed by the LLU operators and those bought by other companies. We feel Ofcom could have gone further however by addressing this imbalance immediately rather than over a three year period.
We are pleased that Ofcom has acknowledged the success of the current regulatory framework by maintaining pricing freedom for Openreach’s fibre products. The UK boasts one of the most competitive markets in the world with around 140 CPs selling fibre via our open wholesale network, whilst more than 3.2 million households also take superfast broadband from Virgin Media."Statement from BT spokesperson