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BT Openreach Price Constraints Eased
22 May 2009 | 09.04 Europe/London
OFCOM has today announced the conclusion of their review and consultation(s) on the price regulation framework applied to BT Openreach. This increases the price ceiling applied to the rental of copper loops by providers of local loop unbundled (LLU) services. In addition to the immediate increase, which can be applied 28 days from today, an inflation indexing mechanism is set to allow the prices to rise in the next two years.
Table 1.2: New controls on MPF and SMPF :-
These price increases, if fully implemented, will see the cost base of LLU operators increase. The biggest and most immediate effect would be on Talk Talk with a 5.8% increase in MPF line rental costs. Most other LLU providers simply add their broadband to a BT voice service using SMPF, they will be in line for future inflationary price increases but the current ceiling stays the same.
To put the prices in context, Talk Talk might be paying £8.28 per month inc VAT for a LLU line rather than the previous £7.83. They currently sell line rental at £11.25.
Price controls on Wholesale Line Rental, which determine the price paid for a line and phone service from a BT exchange, have not been set pending OFCOM's wider ranging review of the wholesale narrowband market. A residential line is currently capped at £9.65 per month wholesale including VAT.
[ OFCOM ]
Table 1.2: New controls on MPF and SMPF :-
| Current price | Price in 2009/10 | Indexation in 2010/11 | |
|---|---|---|---|
| MPF | £81.69 | £86.40 | RPI +5.5% |
| SMPF | £15.60 | £15.60 | RPI +1.0% |
These price increases, if fully implemented, will see the cost base of LLU operators increase. The biggest and most immediate effect would be on Talk Talk with a 5.8% increase in MPF line rental costs. Most other LLU providers simply add their broadband to a BT voice service using SMPF, they will be in line for future inflationary price increases but the current ceiling stays the same.
To put the prices in context, Talk Talk might be paying £8.28 per month inc VAT for a LLU line rather than the previous £7.83. They currently sell line rental at £11.25.
Price controls on Wholesale Line Rental, which determine the price paid for a line and phone service from a BT exchange, have not been set pending OFCOM's wider ranging review of the wholesale narrowband market. A residential line is currently capped at £9.65 per month wholesale including VAT.
[ OFCOM ]