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BT claims Sky and TalkTalk getting an unfair boost from Ofcom’s pricing rules

BT has accused Ofcom of giving rival ISPs like Sky and TalkTalk an unfair advantage by forcing it to sell them cut-price broadband and phone connections.

The UK telecoms giant is unhappy at the latest pricing regulations Ofcom has suggested it will impose on BT Openreach, which supplies connections to other ISPs.

Major broadband providers like Sky, TalkTalk and EE buy ‘unbundled’ broadband connections which Ofcom makes Openreach supply at a discounted price.

BT claims Sky and TalkTalk getting an unfair boost from Ofcom’s pricing rules
BT exchanges were a lot more fun in the old days

BT Retail and smaller ISPs buy more expensive wholesale line rental, and BT says the gap in price between unbundled and wholesale lines should be reduced now there’s strong competition.

BT said: “Our concern is that the prices being proposed are insufficient to fund the higher level of service that Openreach wishes to deliver and its customers expect. 
 
“BT is disappointed that Ofcom wants to extend the unfair regime whereby third parties benefit from cheaper wholesale prices than BT Retail. TalkTalk and Sky have benefited from artificially low prices for many years now and it is time they were forced to compete on a level playing field.”

Ofcom’s latest price proposals would change the annual difference between the costs of  wholesale and unbundled broadband from £18.76 today to £10 in 2016 – slightly higher than it proposed in a first round of consultations this summer.

However, unbundled providers have invested heavily over the last decade to install their own equipment in BT exchanges to control the connection to their customers.

The Ofcom proposals are designed to reduce the gap between wholesale and unbundled connections slowly, as well as reducing the cost of line rental overall.

Ofcom said: “We are inviting evidence on wholesale telecoms charges, and we will assess any arguments put to us before making our final decision in the spring.”

The Ofcom consultation Fixed access market reviews: Openreach quality of service and approach to setting LLU and WLR Charge Controls is open for responses until February 13, 2014, and Ofcom will report its final decision in spring 2014.

Image: David Jones/Flickr

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