Sunday, 20 August 2017

Ofcom proposes higher wholesale rates to cover cost of BT's universal service rollout

By Nick Wood, Total Telecom
Wednesday 09 August 17

U.K. telco regulator suggests incumbent could charge an extra £5.90 per year by 2020/21.

Ofcom on Wednesday suggested allowing BT to raise its wholesale broadband prices to cover the cost of its recently-proposed plan to build new networks in underserved parts of the U.K. "We propose to allow BT to recover relevant efficient costs of this investment through an increase in the charges for broadband lines supplied in the WLA (wholesale local access) market…

Ofcom on Wednesday suggested allowing BT to raise its wholesale broadband prices to cover the cost of its recently-proposed plan to build new networks in underserved parts of the U.K.

"We propose to allow BT to recover relevant efficient costs of this investment through an increase in the charges for broadband lines supplied in the WLA (wholesale local access) market," the telco regulator said, in a newly-launched consultation. "These proposed changes...would only be implemented should BT enter into a clear and public agreement with government committing BT to make the investment in universal broadband."

In late July, BT offered to spend between £450 million and £600 million to connect 99% of U.K. premises to at least 10-Mbps broadband by 2020. Should the Department for Digital, Culture, Media and Sport (DCMS) accept BT's offer, it would negate the Universal Service Obligation (USO), which was introduced under the Digital Economy Act (DEA) and would give people the right to request at least 10-Mbps broadband.

At the time, BT said it would recoup its investment via wholesale access charges.

On Wednesday, Ofcom proposed an additional annual wholesale local access (WLA) charge of £0.23-£1.57 in 2018/19, which would increase in 2019/20 to £0.71-£3.80, rising again in 2020/21 to £1.14-£5.89 (see table).

In March, Ofcom launched its WLA Market Review, and proposed lowering BT's WLA charges over the coming years.

"At the time of our March 2017 WLA consultation we did not have the necessary information on such network expansion, but said that, should relevant information on a committed rollout become available, we would consider any implications for the charge controls proposed in the WLA review," Ofcom said on Wednesday.

Interested parties have until 27 September to respond to Ofcom's new consultation.

Universal broadband was a hot topic at this year's Connected Britain, and promises to be again at Connected Britain 2018, taking place at the Business Design Centre, London, on 19-20 June. Click here to find out more.

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