BT demands end to Sky, TalkTalk broadband subsidies

Editor | 01-03-2014

Buoyed perhaps by its success competing against Sky in the TV arena, BT has turned its sights on the pay-TV firm and rival telco TalkTalk in the UK broadband arena.

Asserting that broadband pricing distortion could reach as much as £1 billion, the UK’s ex-incumbent telco called on UK regulator Ofcom to end its policy of setting prices that favour some operators over others and level the playing field in the wholesale broadband market.

BT, which claims nearly a third of the UK retail broadband market, accepts that Ofcom has successfully created one of the most competitive broadband markets in the world. Yet it notes that its share is far less than the 41–52% enjoyed by other ex-incumbents in Europe. To strengthen its case it cites a new report from Plum Consulting, which states that companies such as Sky and TalkTalk have benefited from this pricing distortion by £623 million over the past nine years.

“TalkTalk and Sky have enjoyed subsidies for the best part of a decade but it is time for that to end. Both are successful companies and both are more than capable of standing on their own two feet,” argued John Petter, CEO of BT Consumer.

Noting the battles in the TV arena, he added: “It is particularly unfair that BT has to give Sky a commercial leg up when they consistently refuse to provide us with fair access to their own services. Ofcom should be given credit for driving competition deeper into the network but that success needs to be reflected in current regulation. We know that Ofcom want to tackle this distortion but we want them to act now given this is a highly dynamic and competitive market. All we are asking for is a level playing field where prices reflect costs and consumers benefit as a result.”