UK government backs BT in dispute with Ofcom
The UK government has stepped into a row between BT and regulator Ofcom over wholesale charges, backing the UK incumbent’s infrastructure arm Openreach.
Culture secretary Karen Bradley wrote to Ofcom chief Sharon White saying the regulator should reassess charge controls on Openreach, warning that price suppression could disincentivise investment in infrastructure.
Bradley said price suppression could “reduce demand for better services, such as fibre,” whilst the plans also raised questions over “whether the regulatory regime is at risk of not striking the right balance between ensuring appropriate consumer prices while driving necessary levels of long-term investment in the networks”.
Ofcom has been locked in a long process with Openreach which led the regulator to force BT to split its infrastructure arm into a legally separate entity earlier this year.
Ofcom also planned to bring in price controls on existing superfast services next year, by looking to cut wholesale prices by up to 40% for service packages of 40Mbps. Ofcom’s move was backed by BT’s competitors.
Openreach has made an offer to boost broadband speeds across the UK, called universal broadband coverage (UBC), which will cost the company somewhere between £450 million and £600 million. It argues caps to wholesale prices will restrict its ability to make back its investment and pour money into new services.