Local loop unbundling and bespoke prices: Ofcom consults

Local loop unbundling

Local Loop Unbundling (LLU) is the means by which other broadband operators connect to consumers via BT's copper local loops – a service for which the LLU operator has to pay BT, at prices approved by Ofcom.

The regulator is proposing to set a ceiling for the rent of a fully unbundled local loop at £81.85. This, it says, will promote competition in the broadband market by ensuring that BT's charge is fair, reasonable and cost-oriented.

The ceiling is actually higher than the amount charged by BT at present which, as from 1st August, has been £80.00 a year – down from £105.09 previously. Ofcom believes that it is still important to set the price ceiling to ensure that BT's charge is transparent and that BT does not increase the charge to an excessive level.

The consultation will run until 10th October. Subject to responses, Ofcom intends to introduce the new fully unbundled rental charge ceiling later that month.

Bespoke prices

The watchdog is also consulting on deregulatory proposals to allow BT to offer large business customers bespoke prices. Comments are requested by 16th November.

At present, BT must offer all large business customers the same published call and line charges, but under Ofcom's proposals, BT would be allowed to agree individual terms with business customers spending more than £1 million a year on telecommunications services without having to publish its prices.

The proposals cover BT's business exchange line services and business inland call services at the retail level, and suggest that the bespoke prices should not fall below a price floor. According to Ofcom, this should be set at the full cost (including network and retail costs) of offering a service to a customer.

According to Ofcom, the measures will stimulate greater competition in the fixed-line market, as well as supporting a potential reduction in BT's prices for large business customers.

The regulator wants to ensure that BT's competitors are able to operate on equal terms with BT. Therefore, the consultation document also proposes that before BT can introduce bespoke pricing, competitors must be able to replicate BT's services using Wholesale Line Rental and Carrier Pre-Selection products.

In a separate consultation, due to close on 30th September, Ofcom is assessing whether these products are now fit for purpose.