Ofcom looks to cap BT wholesale prices

Business broadband could get cheaper with Ofcom looking to cap BT wholesale prices.

The watchdog is focusing on BT once again to limit the price that the firm could charge rivals for access to its wholesale leased line services.

Ofcom, which believed that BT had "significant market power" across several wholesale leased line markets, wanted to impose 'charge controls' to protect buyers of the products, who currently spend around £2 billion a year.

The controls concern two groups of services, or "baskets", provided by BT - older leased lines using 'traditional interface' technology, and newer lines that use the faster Ethernet standard.

Annual charge changes for older 'traditional interface' technology would be capped at a level between the Consumer Price Index (CPI) minus 6.25 per cent and CPI minus 14.25 per cent.

Ethernet service charges would fall steeply with a cap somewhere between CPI minus 9.75 per cent and CPI minus 17.75 per cent.

According to the regulator's estimates, the caps would see prices fall for three years from April 2016.

Mobile and broadband operators that used leased lines for data transfer on their networks would see savings that could be passed on to customers.

According to Ofcom, the new controls should lead to significant real-term price reductions for most customers of the £2 billion leased lines market, such as businesses, schools, universities and libraries.

The move follows a review that found the former state monopoly had "significant" market power.

According to BT, greater regulation could damage investment in infrastructure.

"These are proposals for discussion, so we'll be making our views known to Ofcom. We don't expect a final decision for some time," the company said in a statement.

"We believe there should be less regulation in this market, not more, as businesses already have diverse and growing choice amongst a large number of providers."

The consultation, which would run until July, would consider a form of charge control aimed at bringing prices down over a three-year period.

The BBC quoted Andrew Ferguson, editor of broadband news site ThinkBroadband as saying, the slow speed traditional service on up to 8Mbps leased lines was not likely to help mobile and other broadband operators, since slow lines like were not sufficient for modern backhaul.