UK: BT and TalkTalk broadband pricing examined by CMA

BT and TalkTalk’s appeal against telecom regulator Ofcom’s ruling on superfast broadband charges has now been referred to the Competition and Markets Authority (CMA).

Ofcom’s ruling in March came amid complaints from TalkTalk and other rivals that BT was offering substantially lower retail prices and much higher wholesale prices, thus improving its dominant position in the market while potentially squeezing out competition.

While Ofcom has recently admitted it is looking at various options for the company, which include the “structural separation” of Openreach from BT, it has largely played down fears relating to lack of competition from rivals.

But nevertheless its subsequent price ruling is geared to ensuring BT keeps offering a substantially lower price to rivals for wholesale superfast broadband charges, allowing them to profitably match prices.

As the former state incumbent, BT is currently the largest retail provider of fibre broadband services over its Openreach network, although it is still required to allow other operators to use the same infrastructure to sell superfast broadband to consumers.

The regulator’s new rule does also aim to preserve BT’s current flexibility to set its wholesale fibre prices without doing it in such a way that prevents other firms competing.