Leased Lines Charge Control (LLCC) PPC Points of Handover pricing review

Issued July 20, 2011

Executive summary

This is a further Ofcom consultation on Points of Handover (POH) pricing, following Ofcom’s earlier consultation in March this year. BT has a number of comments on Ofcom’s revised proposals for Points of Handover prices. These mainly reinforce the view from our March response that the use of a bottom up model significantly underestimates actual costs incurred and demonstrates that such models are highly dependent on the assumptions made. This contrasts with the use of published, activity based costs prepared on a FAC basis which are consistent with those used by Ofcom to set other charges controls.

Correcting for the amendments BT has identified coupled with our other comments in this response would take prices to at least the top of Ofcom’s range, with recovery of costs of £3.4m representing the absolute minimum. BT should also be free to set prices to comply with its RPI-X cap within the existing constraints and sub caps. There is no need to add another sub cap for POH services.

We support a number of other Ofcom proposals, including price increases and decreases being made simultaneously. There is no justification for an asymmetric approach to price changes which would be disproportionate and discriminate in favour of certain players. We also welcome Ofcom’s correction of a number of errors in the previous model and consultation.

BT welcomes comments on this response, which should be sent by email to john.morden@bt.com. 

Download full response as a PDF document