Ofcom to examine margin squeeze in fibre pricing allegations

2 May 2013

UK telecoms regulator Ofcom has revealed that it has begun a competition inquiry related to BT’s dominance in the broadband sector, according to British broadsheet The Daily Telegraph. The report cites the watchdog as saying that it had found ‘reasonable grounds’ to support a request made by Sir Charles Dunstone, founder of BT rival TalkTalk, which called on Ofcom to examine the incumbent’s alleged dominance in the supply of fibre-optic broadband services. As such, Ofcom noted that in its examination it aims to ‘consider whether BT has abused a dominant position under UK and/or EU competition law’. TalkTalk’s appeal for the investigation, meanwhile, was reported to have argued: ‘BT has failed to maintain a sufficient margin between its upstream costs and downstream prices, thereby operating an abusive margin squeeze.’

Unsurprsingly perhaps, in the wake of the development BT has been quick to voice its displeasure with Ofcom’s plan to investigate, stating: ‘BT is disappointed that Ofcom has opened this case despite the lack of any evidence. We are confident there is no case to answer. It would be better if the industry’s, and Ofcom’s, focus was on investing in the future of the country rather than on spurious actions designed to hold up fibre in the UK.’ For its part, TalkTalk was understandly more satisfied with the outcome of its call for action, with the alternative operator saying: ‘We have long maintained that there needs to be tighter regulation in superfast broadband to ensure a level playing field and therefore deliver real benefits for consumers and businesses. We are pleased that Ofcom is taking this matter seriously and have decided there is reasonable suspicion to investigate BT’s fibre pricing.’