Ofcom on Thursday proposed new pricing regulations designed to promote competition in the superfast broadband market in the U.K.
The regulator wants to make sure that BT’s wholesale prices allow sufficient margin for retail providers to offer profitable superfast broadband services. The move is good news for the U.K. incumbent’s rivals, but there are n o guarantees that it will lead to a reduction in BT’s wholesale prices.
"We’ll have to wait and see," a spokesperson for the company told Total Telecom, noting that the Ofcom proposal has been sent to the European Commission for comment, something that could take a month.
BT has the flexibility to move its wholesale or retail prices, or to adjust its cost base, if need be, he said.
BT’s rivals are understandably keen to see wholesale prices come down.
"The price for wholesale fibre should be £4 a month, not the £8 a month that it is today," TalkTalk CEO Dido Harding said on BBC Radio 4’s Today show on Thursday morning.
"[However], I’m hopeful that this is the beginnings of a regulatory framework that will force BT to bring their wholesale prices down," she said.
The draft proposal is not necessarily bad news for BT.
Ofcom indicated that at present BT is maintaining a sufficient margin between its wholesale charges and retail prices.
BT said it is pleased that the regulator’s initial assessment of the market showed that it is not acting anti-competitively on superfast broadband pricing, backing up a decision it announced last year after investigating a complaint from TalkTalk.
But Harding is not convinced.
It is "a shame" that based on its initial assessment Ofcom does not consider BT in breach of its new rule, she said on Thursday.
"These calculations are based on data from 2012," she said. "The first full test will be calculated in two months’ time."
BT insists its prices will pass Ofcom’s new test. In the meantime though it is mulling its options.
"We will now consider our response, which may include an appeal," it said in a statement.
While the telco is not opposed in principle to Ofcom’s price test, it objects to its decision to target superfast broadband specifically, without consideri ng its position in a converged market. BT points out that it is a challenger in the TV space, while dominant player Sky "remains largely unregulated."
