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BT locks horns with Sky and TalkTalk over broadband prices

BT has called on Ofcom to tear up rules related to wholesale broadband pricing, which it argues puts BT Consumer at a disadvantage to its chief rivals Sky and TalkTalk. 

Openreach, the network division of BT, is in charge of maintaining the network which ISPs including Sky and TalkTalk use to deliver broadband services to customers. 

Through the LLU (Local Loop Unbundling) programme, rival ISPs are allowed to install equipment in Openreach exchanges, allowing them to connect customers to their network directly from the exchange. 

The BT exchange at Hill Street, Birmingham: BT wants every ISP to pay the same as its consumer arm currently does

Openreach charges these ISPs an annual rate which is regulated by Ofcom. BT Consumer is charged wholesale prices for access, which are more expensive than the LLU rates. BT wants 
Ofcom to intervene and bring LLU prices up to speed with wholesale rates, effective immediately.  

John Petter, BT Consumer CEO said: “TalkTalk and Sky have enjoyed subsidies for the best part of a decade but it is time for that to end. Both are successful companies and both are more than capable of standing on their own two feet.” 

Referring to ongoing negotiations over access to Sky’s premium sports channels, Petter added: “It is particularly unfair that BT has to give Sky a commercial leg up when they consistently refuse to provide us with fair access to their own services.”

Sky argued that the LLU programme has stimulated competition and has seen broadband prices fall in the UK.

Sky said: “We have already invested more than £1 billion in our broadband network to create more choice and competition for consumers, and which has helped drive down prices for millions.  

“We’ve been able to do this thanks to certainty over the regulatory framework against which our investments are made. It’s this very principle of regulatory certainty that BT itself argues for when making investments of its own.”

Ofcom currently proposes to bring LLU prices in line with wholesale ones, but this isn’t due to happen for another six years. BT wants the changes to be made sooner. 
Sky added: “If regulatory charges are to change, this should happen gradually over time as Ofcom proposes.  In any event, we believe that Openreach’s customers are currently paying too much based on inappropriate costs being loaded onto its customers, which hits UK consumers in the pocket.”

Echoing Sky’s statements, a TalkTalk said: “The people who have benefitted from Ofcom’s regulation are consumers. What BT are actually calling for is for consumers and businesses to pay more for broadband, and for that money to go straight into BT’s pockets. 

“Ofcom should be proud of how their approach to regulation has lead to the UK having one of the most competitive markets in the world and they must keep it that way. We urge Ofcom to ignore this self-serving request.” 

TalkTalk in the past has called on Ofcom to control the prices of Openreach’s FTTC (Fibre to the Cabinet) lines, which it says are too expensive. 

Fibre pricing and access to Sky Sports 1 and 2 are both subject to separate consultations which are currently ongoing. 

Ofcom said it is looking into whether or not it will change LLU pricing earlier than originally intended: “We have consulted publicly on proposals for a new charging framework for the broadband market, and we will consider all responses before making our decisions later this year.” 

Image: Mikey/Flickr


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