So you are saying that OPENREACH is allowed to cross-subsidise any other part of BT?

And that all OR Line Renters are providing part of the costs of BT Sport, although many (probably most) do not have access to BT Sport?

Is this not contrary to the legislation that led to OPENREACH being created?

No. Please read it again.

For regulatory and commercial purposes, BT Retail is separate from Openreach and BT Retail are treated in the same way as any other Service Provider by Openreach. Openreach sell connectivity between the exchange and the user's premises. This is only one part of a functional telephone service.

Openreach are paid the regulated price for the components they sell by the Service Providers (including BT Retail) they sell to.
This price is to cover their (Openreach's) own costs and profit. It is not used to subsidise any other part of BT. If this was found to be the case, OFCOM would be very heavy-handed I think.

The 'line rental' price charged to you by your service provider is higher than they pay to Openreach, as they have their own costs and profit on top.

Edited by deleted (Fri 29-Aug-14 11:55:39)

As per Panda's reply, plus many people keep their line and calls with BT even when on a different ISP. I'm one. So my BT Retail costs keep going up, to pay for BT Sport and other goodies they hand out "free".

There's no point in moving it to one of the cartel-type pricers, leaves mainly Primus, the Post Office (I think), and Zen.

As panda says. Indeed there are graphs around showing that the Openreach charge for a line is increasing very slowly (or even decreasing) while the wholesale prices (from BT Retail and most others) are increasing wildly. It may be that BT Retail telephone is cross-subsidising BT Retail broadband.

Yes see the graph at http://www.thinkbroadband.com/news/6604-inflation-bu...

The difference between what Openreach charge and what the retail charges are.

BT Consumer is at liberty to charge what it likes so long as it DOES NOT squeeze the competition unfairly, so line rental at £5 would not be allowed, but at £30/month the public would complain but the competition would not.

The basic Openreach charges is bare line rental, so costs of stuff like Weekend Calls, billing, support, caller ID options need to be added.

Zen clearly believe they have a small profit margin with the price of £11.22 they charge consumers who find out about them.

There is a question to be asked as to why other providers tend to follow the BT retail price rises closely.

In reply to a post by MrSaffron:

There is a question to be asked as to why other providers tend to follow the BT retail price rises closely.

.......to subsidise the dirt cheap broadband?

Bingo though latest Sky offer is interesting as free across minimum term for broadband and the voucher offsets a good chunk of line rental.

In reply to a post by StephenTodd:

Indeed there are graphs around showing that the Openreach charge for a line is increasing very slowly (or even decreasing) while the wholesale prices (from BT Retail and most others) are increasing wildly. It may be that BT Retail telephone is cross-subsidising BT Retail broadband.

Openreach line rental is the lowest since at least 2006. See my post earlier in this thread.

Thanks, Panda.

Effectively that is the answer I was looking for - that OPENREACH, as the "owners" of that connectivity, is not allowed to subsidise the costs of other BT "companies" and their offerings, particularly those which would clearly give the other parts of BT an advantage over the other ISPs.

Agreed that the Service Provider, whether other parts of BT or other ISPs, are free to then adjust their prices, some possibly viewing the Line Rental aspect as a "Loss Leader" or otherwise.

My thanks again for the clarification.

In reply to a post by Stevenage_Neil:

.......to subsidise the dirt cheap broadband?

BT's main DSL competition is from the MPF providers, Talktalk and Sky, and Openreach charge the same for MPF line rental regardless of what those providers push down the line. Hence why those provders mandate taking their line rental with their broadband, and hence why it makes no sense to take their broadband price in isolation, since you can't have it in isolation.

The main aim is to keep the "cheaper than BT" line rental mantra going, then play with the broadband price to make an attractive total cost for both services.

Quite different from the days of SMPF of course, where the providers had to price it to break even on its own, since in many cases the line rental revenue wasn't going to the ISP.