BT has been under considerable pressure for some time to reduce the cost access to the last mile of copper linking households to telephone exchanges, and it looks like they’ve finally done something about it.
The cost of Local Loop Unbundling has long been accused of preventing rival broadband providers from offering competitive products to BT. Ofcom are on the eve of announcement regarding BT’s treatment of the situation – hence BT’s timing, no doubt. BT hope to reduce the need for regulatory intervention – and this demonstrates that they would have been quite happy to sit there enjoying the status quo had Ofcom not accused them of overcharging.
BT chief executive Ben Verwaayen said in a statement: “Our announcement marks a major move towards the telecommunications market of the future. BT has always argued that a market needs to develop in which those who are willing to invest and innovate can reap the rewards. This is a significant step in that direction.
“We now have a far clearer idea of how Ofcom sees the market developing and we share their view that competition based at the infrastructure level will be good for everyone and for the UK in general.
“Their statements about regulatory certainty are crucial as we have enormously ambitious plans for the networks of the future and require that certainty for shareholders if we are going to invest the huge sums required.
“BT took a bold step forward two years ago when it cut the price of broadband and changed the shape of the broadband industry. This is an equally ambitious move and one we are confident will have long term benefits for both the UK and BT.”
The price cuts will take effect form 1 June – the monthly rental price for the existing LLU product will drop from £4.42 to £2.26 (€6.59 to €3.37), connection charges will now be £83.33 (€174.38), down from £117 (€124.20).