Openreach Continues to Face Losses, Says BT
There have been certain changes in charges that Ofcom sets for Openreach, BT’s wholesale broadband division. BT has been allowed to charge £4.71 more for every unbundled line, thus raising the price to £86.40. However, if an internet provider shares a line with BT, then the price cannot be more than what they were last year, which is £15.60.
The Register, a news site says that Ofcom had agreed to increase the prices to something between £85 and £91 and thus it is clear that it has chosen to increase the prices much lesser that what BT may have been expecting.
BT claims that due to the small increase in prices, it will keep on losing money and Openreach will stay in the red until May 2010, after which the prices could see a revision. Ed Richards, the Chief Executive of Ofcom differed from the stand taken by BT and insisted that Openreach will be able to earn profits at current price levels. He explained that keeping the prices in check would attract more users to apply for broadband connections. Click here to compare broadband prices.
BT has responded to this statement by saying that while Ofcom is trying to balance the market, the action is not sufficient and can in fact harm the market, as it will act as a disincentive for future investment. BT also said that Ofcom had agreed that Openreach should be allowed to recover its costs but the steps taken by Ofcom are not letting that happen.
