Acknowledging concerns from the European Commission, UK telecommunications regulator Ofcom has confirmed a new rule has been put in place which will require BT to maintain a sufficient margin between its wholesale and retail superfast broadband charges.
The number of households taking up BT's fibre connections has risen more than 3.7 million since Ofcom introduced the requirement for BT to allow other operators to use its network, with providers often offering speeds of up to 79Mbit/s. The industry is now investing in upgrading the infrastructure to provide 'ultrafast' broadband services that will establish speeds of up to 1Gbit/s. Ofcom's decision aims to ensure that different operators can continue to invest and compete in the developing broadband market in years to come.
The margin-squeeze test to monitor the price BT charges rivals to access its superfast fibre network hopes to promote competition and investment in superfast broadband. It will allow other providers to profitably match BT's prices using the same infrastructure. This action will ultimately benefit consumers as BT and rivals battle to provide you compelling services in a regulated way.
"Robust regulation creates a more competitive market that better serves consumers and small businesses. We do think however that consumers should be disappointed that the proposals will not lead to an immediate price reduction. Broadband is critical to our future. This must be the beginning of the journey to bring down superfast broadband pricing and make consumers and Britain better off," said a Talk Talk spokesman, who welcomed the move and said that the regulator was right to be concerned.
Ofcom said it would push ahead with the new regulations from 1st April, adding that BT would currently pass the test. The new rule will take into account the costs and revenues BT charges for distributing sports content, such as Champions League football. It is placed as a safeguard which will limit "BT's ability to reduce retail margins in future, and ensures that any increases in BT's costs must be reflected in its prices," according to Ofcom's press release.