BT and Virgin warn of business broadband price rises

BT, Virgin Media and Kcom have warned Ofcom that major regulatory changes to the business broadband market risk forcing price hikes

BT has rallied competitor Virgin Media and East Yorkshire incumbent Kcom to its banner and warned Ofcom that if the regulator makes substantial changes to force them to open up their business broadband and dark fibre infrastructure to rivals, it risks forcing them to put up their prices.

In a letter to the regulator, the operators claimed that as well as forcing them to raise the cost of business broadband, Ofcom would also damage the return on investment from their fibre networks and cause them to reconsider future investment.

Rivals, notably Sky and TalkTalk, would like to have deeper access to BT’s fibre to serve their own business customers that goes above and beyond what they can source through Openreach under the current virtual unbundled local access (VULA) regulation. They have also called for BT and its infrastructure arm, Openreach, to be separated outright.

In the letter, leaked to the Financial Times, the coalition of operators responded by saying that, among other things, “allowing multiple operators to tamper with the physical network will cause service faults”.

Although BT was unable to reveal the full contents of the letter, a spokesman told Computer Weekly: “The UK has a vibrant wholesale business connectivity market, with strong competition and innovation among a large number of providers. In fact, Ofcom’s latest data [published on 8 October] clearly shows growing competition, which, if anything, supports the case for further deregulation.

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“We believe that forcing Openreach to offer access to its ducts or dark fibre would increase costs and add extra complexity to the way UK businesses are served.

“Regarding service, Openreach is voluntarily publishing our service performance and this reflects our commitment to improving service.”

Ofcom is currently conducting a major review of the UK’s digital communications market, its first since 2005, which resulted in the separation of BT’s access network and the birth of Openreach.

The review will address current and future regulation, network investment plans, M&A, JV and partnership activity, and the growth of over-the-top (OTT) telecoms services.

Ofcom wants to use the review to make sure that in the future, private sector investment receives proper incentives to maintain the current competitive landscape.

The review prompted further calls for BT and Openreach to be pulled apart – forcibly, if necessary.

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