The UK's telecoms regulator is cutting the price telecoms companies must pay BT to put their own broadband equipment in the phone giant's exchanges.
The rates for transferring broadband customers are set to fall
Ofcom said it was cutting the price BT charges its rivals for transferring one of its customers to another firm's equipment by up to 70%.
BT said it welcomed Ofcom's move, and said it had already cut many prices.
Critics have long argued that steep rates have forced rivals to use BT's own kit, keeping broadband prices high.
Time to open up
Ofcom has recently been outspoken in its warnings to BT that it must open up or "unbundle" this "local loop" to its competitors.
In a recent review, the regulator said a failure to do so would result in a Competition Commission investigation.
BT recently lost the chief of its retail arm, Pierre Danon, who was reported to have been dissatisfied with the slow pace at which BT was unbundling its local loop.
Welcoming the announcement and price cuts, Paul Reynolds, chief executive of BT Wholesale, said: "BT has been working hard with Ofcom since May on this issue, and these price reductions are absolutely in line with what we jointly agreed then."
BT Wholesale is the wing of the telecommunications company that offers its lines to rivals and manages the unbundling process.
BT, as the former telecoms monopoly, controls the vast majority of the telephone lines between exchanges and customers.
It has already cut prices sharply on some of its unbundled products - most notably those in which only the broadband internet access changes hands and BT keeps control of the voice service - almost to the level Ofcom now wants.
New connections for this kind of "shared access" system are down from £117 in May to £37 now, with the new Ofcom-mandated rate of £34.86 set to come in on 1 January 2005.
Annual rental for shared access - currently £27.12, down from £53 in May - will drop to £15.60.
But where telecoms companies want to take over the connection altogether - including both broadband and voice - prices are still far above what Ofcom wants.
Ofcom says it wants the price for transferring an existing BT customer to a fully unbundled line to cost the same as for shared access - £34.60.
BT is still charging £88, the same as in May.
Where BT has to provide a whole new line - for a brand new customer - the cost to BT's rivals from January will be £168.38, down from £192.64 now and £223.33 in May.