Telecoms watchdog Ofcom has ordered BT to slash its local loop unbundling charges by up to 75%, to make it easier for rivals to deliver cheaper broadband services to users.
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Other firms have to pay BT for connection and access when using its exchanges to offer their own broadband lines, and high charges have meant that most companies have simply re-sold BT’s lines.
BT had already announced reductions of up to 70% and was planning a gradual reduction in its charges after initial cuts in May.
Ofcom has ordered that all its proposed cuts must be made by December. BT said it was already at an advanced stage in delivering new products and services that would achieve the cuts Ofcom is demanding.
Stephen Carter, Ofcom chief executive, said, "This new pricing structure has the potential to deliver a faster broadband roll-out for Britain."
A BT spokesman said, "It’s a challenge to get costs down to this level, but in September we will announce how we are going to achieve it."
Analysts at Goldman Sachs have predicted that the local loop unbundling cost cuts will give a big boost to companies such as Cable & Wireless, Thus and Easynet, which are already committed to providing large numbers of broadband lines which are independent of BT’s network.
James Waterworth, regulatory and government affairs manager at Telefonica, said, "This is another step in the right direction for ISPs and their customers."