BT's broadband prices under fresh scrutiny

Fibre optic cables Image copyright Thinkstock
Image caption BT's infrastructure could also be opened up to rivals

UK regulator Ofcom is proposing cutting what BT charges for its leased telecoms lines, which could see significant price cuts for those who buy them.

That includes broadband operators, schools, universities and libraries. Ofcom said that the savings could be passed on to consumers.

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

BT said that more 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 runs until July - will consider a form of charge control that aims to bring prices down over a three-year period.

The charge controls relate to two groups of services - older leased lines that offer speeds up to 8Mbps (megabits per second) and newer Ethernet lines that offer speeds up to 1Gbps (gigabit per second).

Dark fibre

"The slow speed traditional service on up to 8Mbps leased lines is not likely to help mobile and other broadband operators, since slow lines like this are not sufficient for modern backhaul," said Andrew Ferguson, editor of broadband news site ThinkBroadband.

"The real market is the Ethernet sector where the price reduction will be very welcome by those buying these lines."

But he added: "There is also the real risk that BT - if revenue is reduced in one area - will seek to maintain profits by increasing prices elsewhere."

Ofcom is also proposing that companies providing leased lines should be granted access to BT's networks through a process known as dark fibre.

This would involve BT giving competitors physical access to its fibre-optic cables, allowing them to take direct control of the connection.

It is called dark fibre because the cable would not be lit using BT's electronic equipment. Instead the competitor would install its own equipment at either end of the cable.

Ofcom expects to publish its decision in the first quarter of next year, with any price cuts coming into effect in April 2016.

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