Communications regulator Ofcom has gone to the European Commission to approve its plan to stop BT making it hard for competitors to compete in the superfast broadband market.

Ofcom has already set out draft proposals to control what BT charges its rivals for wholesale access to its network to deliver superfast broadband services, and what BT Retail charges to its own customers for superfast broadband.

Communication providers have access to BT’s next generation superfast broadband network through a wholesale product called Virtual Unbundled Local Access (VULA). Image credit: BT

Ofcom fears that BT could manipulate the wholesales and retail prices to make it difficult for rivals to compete on price. For its part BT denies it has any interest in or ability to manipulate prices, and says there is strong enough competition in the market to prevent such practices.

However, Ofcom is going ahead with its superfast broadband price management plans and wants the European Commission to rubber stamp them as required by a European directive.

Ofcom said: “Last year, we set out in draft the obligations we are imposing on BT to regulate the margin between BT’s wholesale and retail superfast broadband prices. Superfast broadband forms a growing part of the overall broadband market and we expect it to become more important, with take-up increasing over the next couple of years.”

It added: “Ensuring that there is effective retail competition in superfast broadband is therefore important to maintaining the UK’s competitive retail broadband market, which benefits consumers.”

Communication providers have access to BT’s next generation superfast broadband network through a wholesale product called Virtual Unbundled Local Access (VULA). Ofcom is “concerned” that BT could distort the development of competition in superfast broadband by setting an “insufficient margin” between its wholesale VULA and its own retail superfast broadband prices.

“Our consultation sets out detailed requirements on the minimum margin that BT must maintain. Our approach is designed to ensure that other communication providers have sufficient margin to be able to compete with BT in the provision of superfast broadband packages to consumers,” Ofcom said.

Ofcom maintains it also wants to continue to provide BT with “pricing flexibility” for VULA which “preserves BT's investment incentives” in relation to superfast broadband.

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