BT hits back at Ofcom over new broadband rule
Telecoms giant BT slammed its industry regulator for taking a “lopsided” approach to the UK market.
Industry watchdog Ofcom yesterday confirmed it was going ahead with a new pricing rule, coming into effect on 1 April. The rule means BT must maintain a sufficient margin between its wholesale and retail superfast broadband fees, in order to allow other providers, which use the firm’s network, to match its profitability.
Ofcom said that while BT is currently maintaining a sufficient margin, the rule is a safeguard which limits its ability to reduce retail margins in future, and ensures that any increases in the telecom firm’s costs must be reflected in its prices.
The rule was brought in after TalkTalk complained in May 2013 that BT was abusing its position. While the regulator cleared BT of the claims, it proposed new measures to ensure that prices would not rise.
The proposal was approved by the European Commission, although it said Ofcom’s inclusion of BT Sport pricing within the test is unfair. The commission said BT should be allowed to compete in this area.
Ofcom said that as BT provides BT Sport free to its superfast broadband customers, the new rule takes into account the costs and revenues of the sport channels.
A BT spokesman said: “We will now consider our options.
“The UK telecoms market is the most heavily regulated in the world, yet there has been little action to address Sky’s continuing dominance of the Pay TV market.
“This imbalance needs to be addressed.”