[UK] BT pushed to cut phone line cost (BBC Tech)

dahamsta

BT pushed to cut phone line cost (BBC Tech)

The cost of fixed telephone line rental will be cut if proposals from Ofcom, the telecoms regulator, are adopted.

The regulator wants BT to reduce wholesale line rental (WLR) for residential customers from £8.74 to £8.39 a month.

In addition, BT should cut the WLR for business customers from £9.95 a month to £9.17, representing an 8% reduction.

WLR is the price that telephone companies pay to rent lines from BT which they then hire to customers.
Ultimately, the reductions in WLR should feed through to customer bills.

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eircomtribunal

What is the margin in the UK compared to Ireland? Now and after the reduction.

P.

Sponge Bob

after reduction a carrier could charge the normal BT rate (c £12 ex vat) for a line and make c.£3 a month profit (33% markup on wholesale) . The markup here is c €1.50 on top of €18.40 or so to give you €19.90 ex vat, the eircom rate.

The markup here is under 10% in other words.

eircomtribunal

Sponge Bob wrote:

The markup here is under 10% in other words.

The word "radical" of Dermot Ahern still rings in our ears
[the then Communications minister Dermot Ahern before the Oireachtas Committee, January 2004, from this link:

While it would be easy and politically attractive for me to announce today that I am taking line rental out of the price basket and going to direct ComReg to introduce a new sub-cap, I have rejected this route primarily because alone it is not the most effective one. I will take a more radical approach, designed to cut line rental prices to Irish consumers by allowing telcom companies to compete against Eircom for line rental. It is designed to cut line rental prices by giving telcom companies the potential to undercut the Eircom price and will give Eircom the incentive to keep prices down. It is designed to build jobs and lower phone prices for Irish consumers which, in turn, will lead to lower inflation.

I will direct ComReg to introduce specifically by Wednesday, 31 March 2004, a wholesale line rental product for voice and data services and to insist that the margin between wholesale and retail is wide enough to drive competion. I will also direct it to insist that the product is accessible, affordable and available for telcom operators. If this product is not in place by 31 March 2004 and if it is not delivering verifiable competition and lower prices by 30 June this year, I will direct ComReg to take line rental out of the present price cap and to set a specific rental cap no greater than CPI

Why is the DCMNR not acting? Could it be that the regulator has misinformed the Minister with regards to this in the same way as the regulator has misinformed about the introduction of flat-rate dial-up?
P.

Capt'n Midnight

http://www.theregister.co.uk/2005/11/09/wlr_ofcom/

The regulator has proposed that residential WLR drops from £9.24 a month to £8.39 a month, while it expects business WLR to fall from £9.95 a month to £9.17 a month.