British telecommunications regulator Ofcom announced plans to sets caps on broadband service provider BT's internet line prices it charges other telecom companies who provide internet access outside London. Ofcom said that the proposed caps on pricing would lead to "real-terms price reductions" for internet service providers and other firms who are at the mercy of BT such as O2, Vodafone and Plusnet. Ofcom's proposal anticipates that the savings these companies enjoy will in turn be passed on to customers. BT is at the top of the leased lines market in the country.
Ofcom proposed that prices for leased lines using older technology should be subject to increases of no more than Retail Prices Index (RPI) inflation plus 6.5 percent over the next three years. Newer lines using Ethernet technology would have to see a price reduction of at least RPI inflation minus 8 percent. Ofcom added in its proposal that BT is facing greater competition from other providers in east, west and central London. In those areas the company would face a "lighter form of control."
Ofcom said that the proposed caps are "designed to align the prices of these BT products with their cost by 2015." The Ofcom proposals will go through a closed consultation process which will at the end of August.