Ofcom moves to cap BT’s wholesale prices

TELECOMS giant BT could see its revenues suffer following yesterday’s proposal by Ofcom of price caps on its wholesale charges.

The telecoms regulator wants to cap the fees BT charges for the lease of its telecom lines, which provide high-speed links for businesses, broadband providers and mobile services. The proposals follow a review by Ofcom, published last month, which concluded the wholesale market for leased lines and fast data services needed tighter regulation due to BT’s “significant market power.”

The caps mean that BT’s wholesale charges for its traditional leased lines could be limited to up to 6.5 per cent above inflation, while its newer Ethernet services would be capped at up to eight per cent below inflation. London, where BT faces greater competition, faces a lighter form of price control.

The caps could affect up to £700m of BT’s revenues. At Espirito Santo, analysts said it “is fairly safe to assume [revenues] will fall”.

Ofcom’s proposals are open for consultation until the end of next month.

BT said yesterday: “We believe regulation should allow a fair return on leased lines products in order to ensure sustainable investment in the future of the UK’s telecoms infrastructure.”