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TalkTalk: Broadband users 'could face rising charges'
Tuesday 10th March 2009, by Daniel King
Proposed increases to the BT wholesale charge could see some broadband customers priced out of the digital revolution in Britain, it has been claimed.
Ofcom is currently considering plans to allow BT to increase the price it charges other internet service providers (ISP) for the use of its network by up to 22 per cent over the next three years.
The regulator wants the new pricing framework to be in place by April, but new findings suggest that these increases could price around 800,000 households out of home broadband by 2012.
Analysis carried out by Warwick Business School economist Dr Chris Doyle and commissioned by budget broadband ISP TalkTalk found that BT's wholesale prices are on course to be among the most expensive in Europe over the next three years.
This is despite the UK having one of the highest population densities in Europe, as well as a population size which allows for scale economies and strong competition in the telecoms market.
"All these factors, together with the elaborate regulatory oversight of Ofcom, should combine to make BT the most efficient and lowest cost provider in Europe with no need for increases to wholesale charges warranted at this stage," Dr Doyle claimed.
He suggested that BT is therefore either "much less efficient than it should be", or is exaggerating its costs and being allowed to make excess profits on its investment.
The warning comes after Ofcom chief Ed Richards insisted that "intense competition" in the broadband market will ensure that BT is not able to run a monopoly on high-speed services as a result of the new regulatory framework.
