UK Regulator Proposes Lower Wholesale Prices for BT Business Lines

(Rewrites, adds detail, BT response)

By Ian Walker and Simon Zekaria

LONDON--The U.K. telecommunications regulator Friday set out plans designed to reduce the wholesale prices BT Group PLC (BT.A.LN) charges for high-speed business lines over a three-year period.

The Office of Communications, or Ofcom, said it is consulting on the proposed level of those controls, which would apply to some of BT's wholesale leased-line prices and should lead to significant real-terms price reductions for most customers, such as businesses, schools, universities and libraries.

Consumer mobile and broadband operators, which use leased lines to transfer data on their networks, would also make savings that could be passed on to customers, the regulator said.

Ofcom said it expects to publish its final decision in the first quarter of next year, with the new proposals taking effect from April 1, 2016.

Last month, Ofcom said BT has "significant market power" in a number of wholesale leased line markets, and that "charge controls" should be imposed to protect buyers of these products.

The main charge controls relate to two groups of services provided by BT. Older leased lines using traditional interface technology and newer lines based on sending data at very high speeds over networks.

"Ofcom is proposing a form of charge control that aims to bring prices down to costs over a three-year period. This type of control, which is linked to inflation based on the consumer price index, provides an incentive for BT to make efficiency gains," the regulator said Friday.

A BT spokesman said: "These are proposals for discussion, so we'll be making our views known to Ofcom. We don't expect a final decision for some time."

"We believe there should be less regulation in this market, not more, as businesses already have diverse and growing choice amongst a large number of providers," said the spokesman. "More regulation could discourage future investment in the U.K.'s telecoms infrastructure."

At 0834 GMT, BT shares rose 0.5% to 449 pence, valuing the company at 37.3 billion pounds ($57.9 billion).

Write to Ian Walker at [e-mail] and Simon Zekaria at [e-mail]

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