BT Must Maintain Sufficient Margin Between Wholesale, Retail Superfast Broadband Charges - Ofcom

By Ian Walker

LONDON--The U.K. Office of Communications said Thursday BT Group PLC (BT.A.LN) must maintain a sufficient margin between its wholesale and retail superfast broadband charges to allow other providers to profitably match its prices.

The regulator made the rule as it set out new measures to promote competition and investment in the growing market for superfast broadband. However, the measures are subject to review by the European Commission, upon which the regulator expects to publish a final statement in February, it said.

The new regulatory condition would start from March and remain in place until March 2017, when the current regulatory review period ends, Ofcom added.

"The new pricing rule would preserve BT's current flexibility to set its wholesale fiber prices, which in turn provides an incentive for future investment by the company in its fiber network," the regulator said.

At the same time, it will mean BT can't set prices in such a way that might prevent other operators from competing profitably for superfast broadband customers.

BT is currently the largest retail provider of fiber broadband services over its network, but is required to allow other operators to use its network to sell superfast broadband to consumers under a process known as 'virtual unbundled local access'.

Responding to the announcement TalkTalk Telecom Group PLC (TALK.LN) said it welcomes the move. However, it believes consumers should be disappointed that the proposals won't lead to an immediate price reduction, a spokesperson said in an e-mailed statement.

"Broadband is critical to our future. This must be the beginning of the journey to bring down superfast broadband pricing and make consumers and Britain better off," the spokesperson added.

-Write to Ian Walker at [e-mail]; @IanWalk40289749

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