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LONDON (Alliance News) - UK telecoms regulator Ofcom Thursday said it has proposed new pricing rules that would set in stone BT Group PLC's ability to maintain a sufficient margin between its wholesale and retail superfast broadband charges, allowing it to invest in its fibre network, whilst at the same time ensuring it wouldn't be able to undercut its rivals in the superfast broadband market.
BT owns the fibre network over which most superfast broadband connections are run, giving access to competitor broadband providers while at the same time offering its own broadband services. That set-up has often drawn complaints from rivals who say BT could undercut them on price.
Ofcom said that in a draft decision it has notified to the European Commission, a new pricing rule would mean that BT must maintain a sufficient margin between its wholesale and retail superfast broadband charges in order to allow other providers profitably to match its prices.
"The new pricing rule would preserve BT's current flexibility to set its wholesale fibre prices, which in turn provides an incentive for future investment by the company 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," it said.
Ofcom added that its indicative assessment, which uses data sources for a mix of years and therefore won't precisely reflect the current position, is that BT is maintaining a sufficient margin under the new draft rules.
"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," it said.
Ofcom said that when it introduced the requirement for BT to allow other operators to use its upgraded fibre network, there were fewer than 100,000 superfast broadband connections on this network. That number has now risen to around 3.4 million, and is expected to continue rising in years to come.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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