Ofcom to probe BT’s alleged “abusive squeeze” on broadband market

Ofcom has launched an investigation into BT's pricing model following a complaint from rival telecommunications provider TalkTalk that it has imposed an "abusive margin squeeze" on the superfast broadband market. 

BT's infrastructure division Openreach charges carriers such as TalkTalk to use its fibre-optic network to offer superfast broadband services. Meanwhile, the company's retail division offers its own superfast broadband offerings direct to the customer. 

TalkTalk's complaint is that the margin between the wholesale prices it charges third parties and the retail prices it charges customers is too small, making it difficult for third parties to compete. 

The company alleges that "BT has failed to maintain a sufficient margin between its upstream costs and downstream prices, thereby operating an abusive margin squeeze".

Ofcom is now investigating whether BT's pricing structure breaches Chapter II of the UK's Competition Act and / or Article 102 of the Treaty on the Functioning of the European Union, which prohibit abuse of a dominant market position,

It will conduct an initial analysis of the matter over the summer, and decide whether to take the investigation further later in the year. 

“BT is disappointed that Ofcom has opened this case despite the lack of any evidence," the company said in a statement. "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.”

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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