Ofcom’s recent announcement that BT’s wholesale line rental is fit for purpose has met with mixed reaction.
Clearly BT are chuffed to have Ofcom on their side (some would say what’s new there) whilst others, such as Your Communications, are less than impressed.
Ofcom believes that, to compete effectively, telecoms companies need a clear margin between the wholesale price they pay to rent a telephone line from BT and the price BT charges their retail customers for line rental. Therefore, to further stimulate competition in the market and as part of the regulatory settlement agreed with Ofcom, BT has been promoting investment in WLR by reducing the price for WLR operators from £9.24 to £8.74 per month effective 1 August 2005. Ofcom has also published proposals to introduce further price reductions.
BT has also this week confirmed that they are implementing their promise made last June to raise the line rental charged by its retail arm from £10.50 to £11.00 a month which should increase the margin for WLR operators.
Gaby Heppner-Logan, BT’s Director of Regulatory Affairs, said: “The UK has one of the most competitive telecoms markets in the world, with dozens of companies offering calls-only packages and several WLR providers already offering both calls and lines on a single bill. Ofcom’s announcement and our own announcement today boosts the telecoms market even further by encouraging more companies to invest in WLR, giving them another attractive route to market and, ultimately, giving customers an even greater choice of supplier”.
Gavin Patterson, Managing Director, BT Consumer added: “BT is still way out ahead on overall value. BT has saved UK consumers £1.1 billion since 1995 by cutting prices and customers now enjoy the lowest call prices in the G7 countries. For example, a 30 minute call ten years ago that cost £1.50 is now 5.5p for an Option 1 customer. And BT uniquely offers innovation like BT Privacy – which has now blocked no less than 150 million unwanted sales calls”.
Patterson added: “BT is going to give more than this 50 pence back to our customers in the shape of money-saving initiatives such as our new Friends and Family Auto-Update. 3.5 million customers could save more than £12 a year by signing up, twice the amount represented by this line rental increase, and over half a million could save £36. Customers will also benefit from other offers we will introduce in the New Year.
Hugh Logan, managing director of Your Communications was less than satisfied however saying, “As one of the UK’s largest calls and lines providers and one of the original six trialists of the Wholesale Line Rental (WLR) product, Your Communications has constructively participated in the process to deliver fit-for-purpose WLR, in the drive towards equivalence and its attendant benefits to our business customers.
“We have actively supported Ofcom’s efforts; however, we don’t believe that WLR is yet fully fit-for-purpose. And, nothing short of a fully fit-for-purpose WLR product will deliver greater competition and choice.
“Whilst Ofcom acknowledges there are still some issues to be resolved, these issues have been around for some time. Whilst BT may have given Ofcom commitments to address these issues, congratulations are premature – the proof of the equivalence pudding will be in the eating.
“In particular, we look forward to being contacted by Openreach management in the New Year, to hear their plans to deliver the remaining fit-for-purpose items. A good starting point would be to provide details as to how and when they will ensure that our clients can take their existing WLR-provided lines with them when they move office, as they of course wish to do.
“In addition to making it easier to allow end users to switch communication providers, BT needs to deliver systems and processes allowing us to deliver a service that meets our customer’s expectations.”