BT face new restrictions on broadband access

15 January 2015

bt-logo Ofcom are after BT again, this time regarding new restrictions on their superfast broadband pricing.

Other companies, such as Sky and TalkTalk have to buy access to the BT network so they can provide the service to customers. There's been complaints and Ofcom have been looking into whether or not BT are squeezing margins against competitors, and if it looks like they've been up to no good, BT will either have to raise their prices to be in-line with their rivals, or drop their wholesale costs.

The regulator's ew rules would be to ensure that other companies are able to make a reasonable profit and maintain competition in the sector.

Ofcom, intitally, think that BT aren't operating a margin squeeze and said: "Therefore, the condition is a safeguard which limits BT’s ability to reduce retail margins in future, and ensures that any increases in BT’s costs must be reflected in its prices."

Naturally, BT have been fighting these new rules, in particular, Ofcom's decision to include the cost of BT Sport, which goes into hundreds of millions of pound per year, when totting up BT’s costs of providing superfast broadband to their own customer base. However, Ofcom argue that, because the TV channels are given free to broadband customers, these costs need to be included.

Not only that, if BT start doing mobile offers bundled in with broadband, then they'll need to be taken into consideration too. With BT completing their £12.5bn acquisition of EE, there's a lot to take into account.

If the decision goes against BT, then they've got a 'stick or twist' decision to make by making things more expensive for customers or rival businesses.

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