Ofcom to introduce competition rules for BT wholesale pricing

Ofcom to introduce competition rules for BT wholesale pricing

UK regulator Ofcom is to introduce a new pricing rule designed to ensure BT maintains a sufficient margin between its wholesale and retail superfast broadband charges.

The draft decision to the European Commission is said to ensure BT is unable to set prices in a way that might prevent other operators from profitably matching its prices.

Designed to maintain competition and investment in the UK market, Ofcom said the new measure would preserve BT’s existing flexibility to set its wholesale fibre prices, which in turn provides an incentive for future investment by the company in its fibre network. 

The move follows complaints from BT’s rivals that it is operating a so-called “margin squeeze” against them by keeping its wholesale and retail prices too close together. Ofcom said on its initial assessment that BT is not operating a margin squeeze. 

“Therefore, the condition is a safeguard which limits BT’s ability to reduce retail margins in future, and ensures that any increases in BT’s costs must be reflected in its prices,” the UK regulator said. 

The new rules will also include the costs and revenues of BT Sport, as well as other mobile offers included by BT in its retail superfast broadband bundles, after its acquisition of EE is finalised.  

“Today’s draft decisions are aimed at ensuring that different operators can compete in the developing broadband market in years to come, so that consumers benefit from competitive prices, network investment and high-quality, innovative services,” said Ofcom.

The measures are subject to review by the European Commission. Ofcom expects to publish a final statement in February, with the new regulatory conditions to begin in March this year and remain at least until March 2017. 

Gift this article