BT must maintain sufficient margin between wholesale and retail superfast broadband charges: Ofcom

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Telecom regulator Ofcom has outlined new rules to force BT maintain a sufficient margin between its wholesale and retail superfast broadband charges.

The UK regulator has notified the European Commission (EC) of a draft decision on new pricing rules, which it claimed will promote competition and investment within the ‘superfast’ broadband market.

BT, which owns and operates the UK’s largest fibre broadband network, is currently required to allow other service providers access to it under a process known as ‘virtual unbundled local access’ (VULA).

As per the new rules, BT would be required to maintain a “sufficient” margin between its wholesale VULA and retail fibre broadband charges in a bid to allow rivals to make reasonable profits.

“We are concerned that BT could distort the development of competition in superfast broadband by setting an insufficient margin between its wholesale VULA [Virtual Unbundled Local Access] and retail superfast broadband prices,” Ofcom said in a statement.

“Our approach is designed to ensure that other communication providers have sufficient margin to be able to compete with BT in the provision of superfast broadband packages to consumers.”

Resisting the new regulations BT said that “Ofcom’s statement is misconceived but not unexpected as it largely confirms the approach they outlined last year. We will now consider our response, which may include an appeal.”
‘We’re not opposed to the principle of a test. In fact, we passed the standard Competition Act test recently and Ofcom has said our current prices will also pass this new test when it comes into force.”

Ofcom’s proposal is subject to a review by the European Commission. The new regulatory condition will start in March and remain in place until March 2017, when the current regulatory review period ends, the watchdog said.