Wednesday, November 16, 2005

BT Cuts Local Loop Unbundling Prices 40% to Stimulate Competition

BT announced a 40% price cut in Local Loop Unbundling (LLU) tariffs aimed at further stimulating competition in the UK broadband market.

The move follows BT's commitment to industry in June that it would bring the price of LLU New Provide charges in line with those for Wholesale Line Rental (WLR). BT said it is commited to making LLU a success.

From 15-Dec-2005, the price for new provides on the fully unbundled product will be reduced from £168.38 (ex. VAT) to £99.95 (ex. VAT).

BT will also be withdrawing the minimum term rental charges for both its shared and fully unbundled products giving LLU operators the opportunity to pass this benefit on to end-customers.

This reduction follows the 70% reduction in total charges for shared LLU introduced by BT Wholesale in September 2004. With the introduction of these price reductions, the UK is now ranked third in Europe on price comparison for LLU.

  • In September 2005, BT unveiled openreach, a separate operating company, that will ensure that all service providers have transparent and equal access to the local BT network. openreach, which will be operational from January 2006, will be responsible for operating and maintaining the "first mile" infrastructure that connects homes and business to BT exchanges across the UK.

  • In June 2005, BT reached an agreement with Ofcom, the telecom regulatory authority in the UK, to avoid the break-up of the company and provide a long-term framework for the UK's fixed line telecommunications market. Under the agreement, BT will set-up a new - and operationally separate – business unit with a distinct new brand and identity. The new business unit will be staffed by around 30,000 employees presently responsible for the operation and development of BT's local access networks. It will have separate physical locations for management teams and separate bonus schemes with long-term incentive plans that reflect the objectives of the new business unit, not those of the BT Group plc. The new business unit will be required, through a set of formal rules on governance and separation, to support all providers' retail activities (including those of BT Retail) on a precisely equivalent basis. The new business unit will offer a universally available product and service set, including Local Loop Unbundling (LLU), shared loops (where BT Retail continues to provide voice services and another provider is responsible for broadband), Wholesale Line Rental (WLR), and Backhaul service. Equivalence of Input will also apply to IPStream - BT's wholesale internet products used by many Internet Service Providers (ISPs) to provide broadband connections for their customers.

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