BT Line Rental

More than 10 million BT customers have been dealt a blow with the cost of basic monthly line rental rising from £15.45 to £15.99.

The phone giant has been steadily raising its charges for the past five years, making customers fork out almost £5 more for the same service. Basic line rental cost just £11.50 in 2008. This an increase of 39pc in six years.

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OFCOM proposed cap BT Charges

OFCOM has launched plans to price cap traditional technologies and the newer high speed Ethernet services, provided by BT.

The regulator claims that pricing controls  are required to counteract the “significant market power in a number of wholesale leased line services” that BT enjoys in the telecoms market.

These Leased line type services are part of the telecoms infrastructure, They enable voice and data traffic to be routed between locations. They are used by many businesses and organisations for a range of IT  platforms, such as internet access. They are also used by network communications providers, for example mobile networks.

OFCOM estimate the market to be in the region of £2billion per annum.

OFCOM has proposed a number of varying price caps that are dependent on the precise services organisations opt for with BT’s traditional technology. The suggestion is  that BT can impose year-on-year rate rises of 3.25% on top of inflation.

For Ethernet usage, Ofcom has proposed that BT decrease what it currently charges from between 8% and 16% a year after RPI has been factored in, depending on the type of service businesses have contracted for. In areas where BT face greater competition in this area, London for example, less restricted price controls have been suggested by OFCOM.  As a result the company will not be able to place any price rises for use of those lines for three years, under the plans.

Ofcom say that the proposals are “designed to align the prices of these BT products with their cost by 2015.” It also has said that the  controls it has suggested will incentivise BT to “make efficiency gains.”

“We want to ensure that the prices for wholesale leased lines services are not excessive and are broadly in line with the cost of provision,” OFCOM also said. “Wholesale prices for leased lines are likely to be reflected in retail prices. Excessive wholesale prices are likely to result in excessive retail prices, which would be to the detriment of consumers.”

Those affected by these proposals from OFCOM have until the end of this month to make representations to the regulator.