Ofcom has told the European Commission that it plans a new pricing rule that would force BT to maintain sufficient margin between its wholesale and retail superfast broadband charges in order to allow other providers profitably to match its prices.
The regulator says the new rule would allow BT to maintain enough flexibility in its pricing to provide incentive for future investment in its fibre network. At the same time, the rule would mean BT could not set prices in such a way that might prevent other operators from competing profitably for superfast broadband customers.
The move was welcomed by Talk Talk, which said the regulator was right to be concerned that BT could abuse its position to undermine competition in superfast broadband. “Robust regulation creates a more competitive market that better serves consumers and small businesses. We do think however that consumers should be disappointed that the proposals will not lead to an immediate price reduction. Broadband is critical to our future. This must be the beginning of the journey to bring down superfast broadband pricing and make consumers and Britain better off,” said a Talk Talk spokesman.
BT is currently the largest retail provider of fibre broadband services over its network, but is required to allow other operators to use its network to sell superfast broadband to consumers under a process known as ‘virtual unbundled local access’ (VULA).
BT currently provides BT Sport free to its superfast broadband customers, and the new rules take into account the costs and revenues of these sport channels, as well as other elements included by BT in its retail superfast broadband bundles.