Ofcom investigates BT ‘margin squeeze’ accusation from TalkTalk

Regulator Ofcom investigates TalkTalk's complaint BT abused its market position in charging too highly for wholesale broadband infrastructure

Telecoms regulator Ofcom is to investigate BT to see whether it is playing fair with its wholesale broadband prices.

The regulator received a complaint from rival telecoms firm TalkTalk, which accused the telecoms giant of taking advantage of its dominant position in the UK broadband market to overcharge for leasing its broadband infrastructure. TalkTalk said the result of BT's broadband infrastructure pricing was a "margin squeeze" between its upstream costs and downstream prices.

As a result, TalkTalk claimed BT could stifle competition in the market place and keep its own prices lower.

Ofcom will now look into the accusations and see if BT is breaching either chapter II of the Competition Act 1998 or article 102 of the Treaty on the Functioning of the European Union (TFEU).

“As set out in section 25 of the Act, Ofcom may conduct an investigation where there are reasonable grounds for suspecting that the Chapter II prohibition and/or the prohibition in Article 102 TFEU has been infringed,” read a notification from the regulator.

“Ofcom has now opened an investigation under section 25 of the Act into the matters raised by TTG’s [TalkTalk Group’s] complaint and will consider whether BT has abused a dominant position under UK and/or EU competition law.”

TalkTalk has welcomed the move, with a spokesman adding: "We have long maintained 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 has decided there are reasonable grounds to investigate BT's wholesale fibre pricing." 

However, BT maintains it has done nothing wrong and has expressed dismay at the regulator’s decision.

“We’re disappointed that Ofcom has opened this case despite the lack of any evidence and we’re confident that there’s no case to answer,” said a spokesman.

“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.”

Ofcom will gather information over the spring and summer months of 2013 and will report back on its analysis during autumn or winter.

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