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BT could face new competition in call origination business as Ofcom launches review

The communications regulator is proposing to deregulate the market so phone network providers will no longer need to purchase the capability from BT

BT Group PLC - BT could face new competition in call origination business as Ofcom launches review of wholesale market

BT Group PLC’s (LON:BT.A) wholesale ‘call origination’ service, which is used by some phone companies to enable customers to make landline calls, is facing scrutiny as part of a review into the wholesale calls market by the UK regulator.

Ofcom said on Thursday that with landline calls over the next few years to be “increasingly carried over more modern, internet protocol (IP) networks”, it is proposing to deregulate the wholesale call origination market, as providers will no longer need to purchase the capability from BT.

READ: BT gets target price trim by Jefferies after bleak guidance scenarios

The regulator also said it will set out how it intends to regulate BT’s IP interconnection service in light of the technological shift away from the traditional telephone network.

Ofcom said it is also proposing a cap on termination rates for calls made and received in the UK, charges that are paid by a caller’s network provider to the recipient’s phone company for connecting a mobile or landline call.

The cap for mobiles is proposed at 0.389p per minute, lower than the current cap of 0.468p, while the landline cap will remain at 0.0292p per minute in real terms. Ofcom also proposed that for calls to UK numbers from abroad, UK providers should charge no more than the rate they are charged when customers make calls to that international destination.

Ofcom said it intends to publish the final decisions before the new regulation takes effect in April 2021.

Shares in BT were down 1.6% at 108.4p in lunchtime trading.

Quick facts: BT Group PLC

Price: 98.94 GBX

LSE:BT.A
Market: LSE
Market Cap: £9.81 billion
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