Openreach set to receive the nod for wholesale price hike
Openreach look likely to receive permission to increase some wholesale prices, subject to the outcome of an OFCOM consultation launched today.
The objective of the increases is to allow Openreach to achieve an economic return on its local loop telephone lines when sold either as a wholesale telephone service or as an unbundled loop. Previously it was argued that the caps on charges did not reflect current or future costs and that the LLU charges in particular were capped below cost and hence an effective cross subsidy was benefiting the LLU operators.
Fully unbundled lines, used for example by Talk Talk, will see the largest increases from a current cap of £81.69 per year to a range of £85.00 to £91.00 for 2009/10 followed by RPI + 0.0% to RPI + 5.0% thereafter.
Rises of up to 3.7% are proposed for wholesale residential lines, increasing the price cap from £100.68 to a maximum of £104.40. Increases thereafter will be the subject of a wider ranging market review.
With the economy still firmly within the grips of a recession, any wholesale price hike is sure to be vehementally opposed by both ISPs and consumers.
