Ofcom proposes controls on high-speed business line costs

The proposal would see costs fall over a three-year period, using a form of charge control linked to inflation and based on the consumer price index. This would provide an incentive for BT to make efficiency gains, Ofcom said.

The main proposed charge controls relate to two groups of services provided by BT: older leased lines using traditional interface technology, and newer lines based on the ethernet standard that send data at very high speeds over networks. Ofcom said.

For traditional interface services with bandwidths up to and including 8Mbit/s, Ofcom proposed a cap on changes to charges of between annualised CPI minus 6.25% and CPI minus 14.25%.

For example, if annual CPI were 2%, and the lower end of the proposed range (6.25%) were used, BT would have to reduce its charges by 4.25%, an Ofcom spokesman explained. This would bring prices down each year, and would be used for three years from April 2016.

For Ethernet services with bandwidths up to and including 1Gbit/s, Ofcom proposes a cap of between CPI minus 9.75% and CPI minus 17.75%, over the same period.

The new controls should cut prices for most customers of the £2bn leased lines market, such as businesses, schools, universities and libraries, Ofcom said.

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

BT issued a statement that 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."

"More regulation could discourage future investment in the UK's telecoms infrastructure," BT said.

A consultation on the proposal will run until 31 July, and Ofcom expects to publish its final decision in the first quarter of 2016. If approved, the caps would take effect from 1 April 2016.

Ofcom launched an "overarching review of the UK’s digital communications" in March in a move aimed at future-proofing investment and competition in the market. This will look at both digital communications infrastructure and the services provided over those networks, Ofcom said. Its aim is to ensure that there is "good outcomes" for consumers and businesses on issues such as network and service coverage, choice, price and quality, it said.