BT criticises Ofcom over unbundling prices

BT claims Ofcom regulations give Sky and TalkTalk an unfair advantage over smaller ISPs and calls for change

BT has hit out at Ofcom for continuing to give Sky and TalkTalk cut-price access to its network, claiming its original goal to promote competition in the market had been achieved.

The telecoms regulator set out rules in 2005 enabling rival operators to install their own equipment in BT’s exchanges and offer their own phone and broadband services – a process known as local loop unbundling (LLU).

The idea was to encourage more players into the market which could not compete with the incumbent telecoms provider and offer consumers more choice.

The price for LLU was set below cost as encouragement, but Ofcom pledged in 2009 to bring these prices in line with direct wholesale services – bought by smaller alternative providers – by 2013.

BT claimed the regulator has pushed this deadline back by three years. As a result, BT said companies such Sky and TalkTalk – which depend on LLU – continue to benefit from massive savings. BT calculated these to have amounted to £623m over the past nine years.

It also claimed the regulation was damaging small ISPs, which did not have the capital to invest into LLU, both in their pockets and from a competition standpoint.

“TalkTalk and Sky have enjoyed subsidies for the best part of a decade but it is time for that to end,” said John Petter, CEO of BT’s Consumer division. “Both are successful companies and both are more than capable of standing on their own two feet.

“Ofcom should be given credit for driving competition deeper into the network but that success needs to be reflected in current regulation. We know that Ofcom wants to tackle this distortion but we want them to act now, given this is a highly dynamic and competitive market. All we are asking for is a level playing field where prices reflect costs and consumers benefit as a result.”

Ofcom responded but made no direct pledge to grant BT’s request.

A spokesman said: “We have consulted publicly on proposals for a new charging framework for the broadband market and we will consider all responses before making our decisions later this year.”

Read more on Telecoms networks and broadband communications