‘Monopolistic’ BT kicked where it hurts

BB row rumbles on

By Tim Richardson, 8th May 2003

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BT was left with little option but to cut the cost of its Datastream wholesale broadband product - or face regulatory action from Oftel.

Confirmation that BT was effectively threatened by the regulator has given heart to rival operators to continue to pursue actions against the dominant telco.

In a statement Oftel boss David Edmonds said: "Our initial findings were that these price changes, relative to the Datastream product, could have prevented other operators from competing to provide broadband services to Internet service providers. I therefore held urgent discussions with BT, and I asked them to make reductions in the price of the Datastream product.

"Maintaining the commercial viability of the Datastream product is crucial if other operators are to be able to compete fairly in broadband connectivity.

He added that the price cut announced by BT "is of the same level as I would have imposed using my statutory enforcement powers at this stage of the investigation".

For its part, BT is playing down the cut by insisting that it was made following "representations from customers" and "talks with Oftel".

But an Oftel spokesman told The Register that BT's decision to not cut the wholesale cost of Datastream "did constitute a margin squeeze".

"Unless BT did something about it, Oftel would have taken regulatory action," he said.

The row began last month when BT cut the cost of its wholesale IPStream product, which provides an end-to-end ADSL service solely using BT's network.

Rival telcos argued that the cuts did not apply to DataStream products, which use competing national networks from alternative, rival carriers.

They complained to Oftel accusing the dominant telco of anti-competitive behaviour and margin squeeze - something with which the regulator agreed.

Despite this initial victory, rival operators claim the price cut is not enough and are urging Oftel to maintain pressure on BT.

Ian Hood, a director at Thus, said: "The price cuts announced by BT yesterday appear to be the minimum required to prevent the immediate imposition of a provisional order by Oftel.

"We do not the believe the price cuts go far enough but we welcome Oftel's rapid intervention into what we see as yet another abuse by BT of their market dominance.

"We look forward to further changes to the DataStream product, including additional price cuts, upon the completion of Oftel's investigation."

His words were echoed by Energis chief exec John Pluthero: "This is another illustration of BT’s monopolistic behaviour and failure to open up wholesale broadband to full competition.

"BT have to be compelled to give ground yard by yard and their late, reluctant and modest price reduction does nothing to redress the competitive balance.

"The complaint is still open, we urge Oftel to conclude it rapidly and insist on a full price reduction to Datastream."

Oftel is expected to publish the findings of the full investigation next month. ®