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Pressure is growing on industry regulator Ofcom over concerns that it "may have misjudged the market implications" of a recent decision that threatens to force dozens of small ISPs out of business.

Sir George Young, Tory MP for North West Hampshire, is calling on Ofcom to explain why the cost of wholesale xDSL broadband is to increase for small ISPs potentially forcing them out of business. His intervention comes amid concerns that Ofcom hasn't properly thought through proposals intended to increase competition in the broadband sector, but which have the opposite effect.

Said Sir George: "I've written twice now to Ofcom about concerns raised with me by Internet Service Providers and their representatives, asking for an early response to what seems to be a rather time sensitive situation.

"Having now had an opportunity to hear the views of BT as well as their ISP customers and others there does appear to be a prima facie case suggesting that Ofcom may have misjudged the market implications of its decision on an obscure bit of jargon called the 'margin squeeze test' and related rulings as applied to BT's pricing and product packaging in the wholesale ADSL market.

"What's happened could have a dire effect on small service providers and their customers - including in particular small firms that have built a high dependence on the web and the Internet into their business activities.

Given that (according to BT) it is Ofcom's regulatory position that has led to the price and product changes...I now regard it as very urgent to have a clear statement from Ofcom that recognises the issues brought forward by ISPs and their representative organisations and explains how the margin squeeze test and other relevant decisions and rulings are intended to benefit the industry and its customers."

No one from Ofcom was available for comment at the time of writing. ®

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