Ofcom enforces BT margin rule

20 March 2015 |

Ofcom has introduced a pricing rule which will require BT to maintain a sufficient margin between its wholesale and retail ultra-fast broadband charges.

The rule, which will take effect April 1, is designed to promote competition and investment in the industry.

The UK regulator said the measure will preserve BT’s existing flexibility to set its wholesale fibre prices, which in turn provides incentives for future investment. This means BT will not be able to set prices in such a way that might prevent other operators from competing profitably for super-fast broadband customers.

According to the UK watchdog, its indicative assessment shows that BT is presently maintaining a sufficient margin between wholesale and fibre prices under the new rule. “The rule is therefore 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,” it said.

The regulator said the pricing rule also takes into account the costs and revenues of BT Sports, as well as other elements included by BT in its super-fast broadband bundles.

"Ofcom’s decision is aimed at ensuring different operators can continue to invest and compete in the developing broadband market in years to come, so that consumers benefit from competitive prices and high-quality, innovative services" said the regulator.