BT hacks LLU prices - Ofcom looks on grinning

BT announced today that it is slashing its LLU (local-loop unbundling) charges by around 35 per cent and will push this to 70 per cent soon.

In the new double act that BT and Ofcom have developed for announcements, at least on broadband, Ofcom then had a press conference to say how well BT is doing - especially chairman Ben Verwaayen.

Ofcom CEO Stephen Carter also presented his vision of the broadband future in the UK in the form of the first phase of the regulator's review of the broadband market. He announced a new post of adjudicator, which will be set up to sort things out between BT and the rest of the industry and, almost as an aside, tossed in his approval for the new, mildly contentious, retail telephone charges.

Verwaayen made much of BT's foresight and the good it says it has done the UK broadband market. He said: "BT has always argued that a market needs to develop in which those who are willing to invest and innovate can reap the rewards.

"We now have a far clearer idea of how Ofcom sees the market developing and we share their view that competition based at the infrastructure level will be good for everyone and for the UK in general."

He added: "BT took a bold step forward two years ago when it cut the price of broadband and changed the shape of the broadband industry."

The announcement seems to have caught most of the opposition on the hop. The Broadband Industry Group (BIG) was at the time of writing still trying to agree on the wording of their response.

Long-time critic Wanadoo, formerly Freeserve, which wants to push into the streaming media world, rushed out a short and sweet statement simply welcoming the new charges. It said, "Cutting LLU costs will trigger a real broadband revolution in the UK by allowing ISPs to offer new, more flexible packages independent of BT's network."

It's been left to the analysts to point out some of the flaws of the announcement.

Ovum research director Serafino Abate said: "BT's price cuts look dramatic, but they are designed to bring prices in line with Europe. BT's price for shared access is around 38 per cent higher than the EU average and so is its price for a fully unbundled loop."

The charges that BT is dropping are the monthly line rental, from £4.42 to £2.26 per line, and the connection charge from £117 to £83.33.