Ofcom Proposes Rules to Prevent BT Monopoly
The rules could prevent BT from strategically reducing its prices, which could prevent challengers from entering the market.
Industry regulator Ofcom reported in a consultation paper released on Friday that it was considering new rules against BT to prevent it from undercutting rival firms investing in super- and ultrafast broadband.
The report, titled Wholesale Local Access Market Review, describes Ofcom’s general aim of promoting industry competition in light of BT’s, “significant market power”. It claims in particular that Ofcom will be examining the potential for BT to introduce targeted discounting for its broadband products, which could prevent challengers from entering the market.
BT is Britain’s biggest domestic telecoms company, supplying broadband services to 25.3 million households in the UK.
According to Ofcom, it has become concerned that BT, “might seek to prevent or reduce competitive rollout of new ultrafast networks by reducing its wholesale prices in the areas where others are starting to roll out new networks.
“These proposals are designed to encourage investment in new ultrafast networks, promote competition and protect consumers.”
An Openreach spokesman acknowledged that BT will respond in due course. They added: “This is only one small aspect of the WLA review and we’re awaiting Ofcom’s broader conclusions on the right regulatory framework to encourage investment by us and others.”
But at a recent speech at rival Virgin’s Media HQ, Chief Executive of Ofcom Sharon White reignited the calls and cited BT’s ultrafast fibre to the premises (FTTP) penetration – resting at 3% – as one example of a slower service compare to mainland Europe, for example. White said: “While most of us rely on decades-old copper connections, seven in 10 people in Spain and Portugal can access full-fibre broadband.
“To catch up, we need still bolder commitments. And the biggest player remains BT. We welcome Openreach’s commitment to reach two million homes with full fibre by 2020.
“The company has also outlined plans to reach 10 million by the mid-2020s, but dependent on up to £7 a month being added to broadband bills. We expect BT to go further, and make a reality of the ambition it has set itself to be – and I quote – ‘a national champion with the scale and expertise to meet Britain’s future communications needs’.”
She added: “We recognise, of course, the competing priorities that any major operator faces – be it investing in sports or other content rights, dividends, pensions or its broadband infrastructure.
“But the national priority is clear.”