October 20 2014 Latest news:
Thursday, June 19, 2014
BT faces regulation over its pricing of fibre broadband despite a ruling by regulator Ofcom that its wholesale charges to rival TalkTalk are not anti-competitive.
Ofcom has proposed new requirements on BT to promote competition in the growing market for superfast broadband customers.
The rules would mean BT having to maintain a sufficient margin between its wholesale and retail superfast broadband charges to allow other operators to profitably match its prices.
However, Ofcom rejected a complaint from TalkTalk that BT had failed to maintain the margin.
Different operators sell superfast broadband over BT’s network, using a process known as “virtual unbundled local access” (VULA)m, and BT has flexibility to set the wholesale price for providing this access to its network.
Ofcom said its proposals preserved that flexibility while seeking to ensure that BT does not set prices in such a way that prevents other operators from competing profitably for superfast broadband customers.
BT currently provides BT Sport free to its superfast broadband customers, and Ofcom said the proposed new rules would take into account the costs and revenues of these sport channels.
When Ofcom introduced the requirement for BT to offer other providers access to its fibre network, there were fewer than 100,000 superfast broadband connections provided in this way.
That number has risen to 2.7 million, and take-up is expected to increase further over the coming years.
According to recent Ofcom research, one in four UK residential fixed broadband connections are now superfast.
Separately, Ofcom announced there were “no grounds for action” on TalkTalk’s complaint alleging that BT failed to maintain a sufficient margin between its VULA wholesale and retail prices.
“We are pleased that Ofcom has rejected TalkTalk’s competition complaint and shown that BT’s fibre pricing is completely fair,” a BT spokesman said.
“There is strong competition in the UK broadband market and we are confident our pricing will pass any regulatory test that may be put in place. It is important that Ofcom encourages investment as well as competition, and recognises the full costs involved in deploying fibre.”