BT, TalkTalk Welcome Ofcom Fibre Price Consultation

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Regulator to examine fibre broadband pricing, after it rejects TalkTalk complaint against BT’s fibre access charges

The UK telecoms regulator Ofcom has dismissed a complaint from TalkTalk, after it alleged that BT was charging other Internet Service Providers (ISPs) too much to access its fibre optic network.

Despite the setback, TalkTalk has welcomed the regulator’s promise of greater scrutiny and regulation for fixed-line broadband prices in the UK.

Complaint Dismissed

In May 2013 TalkTalk filed the complaint with the telecoms regulator against BT for an alleged abuse of a dominant position in relation to the charges it demands from other ISPs for access to its fibre network. It followed previous comments from TalkTalk CEO Dido Harding when she said it was worrying that the majority of superfast broadband customers receive their products from two operators – BT and Virgin Media.

network fibre surveillance data pipes abstract © kentoh ShutterstockBut after Ofcom investigated, it has decided there is no further action required.

“Ofcom has investigated TalkTalk’s complaint under the Competition Act 1998, and has provisionally decided there are no grounds for action,” said Ofcom in its ruling. “This investigation is separate from the new rules we are proposing for BT under the European telecoms framework today.”

Despite that ruling Ofcom opted for a consultation on the prices that BT charges for access to its Openreach fibre services, known as ‘virtual unbundled local access (VULA).’ It wants to ensure prices are as low as possible, so that ISPs can offer their customers cheaper fibre-based packages.

Ofcom said the consultation will close on 28 August, and a decision is expected sometime in the fourth quarter.

Consultation Welcomed

Perhaps surprisingly, Ofcom’s two decisions were welcomed by both BT and TalkTalk.

“We’re really pleased that Ofcom is today announcing that it now proposes to start regulating fibre more effectively,” a TalkTalk spokesperson told TechweekEurope via email. “We have long maintained that the time has come for fibre to be more robustly regulated, starting with a margin squeeze test. This leads naturally towards full price regulation in 2017.

“What matters most is ensuring a level playing field and competition for fibre in the future. Once implemented, these new rules will make British consumers and businesses better off,” said TalkTalk.

BT meanwhile was equally bullish about the regulators’ decision.

“We are pleased that Ofcom has rejected TalkTalk’s competition complaint and shown that BT’s fibre pricing is completely fair,” a BT spokesperson said. “The consultation is welcome. We hope it results in regulatory clarity and certainty, and discourages spurious claims such as that made by TalkTalk.”

And BT insisted that British consumers are benefiting from strong competition in the broadband market, but pointed to the fact that it has to cost justify the significant investment in building its fibre optic networks.

“There is strong competition in the UK broadband market and we are confident our pricing will pass any regulatory test that may be put in place,” said BT. “It is important that Ofcom encourages investment as well as competition, and recognises the full costs involved in deploying fibre.”

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Author: Tom Jowitt
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