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Ofcom probes BT over fibre pricing after repeated gripes from TalkTalk

Fight, fight: 'Very talented and lovely monopolist' vs 'copper Luddites'

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Former jockey Dido Harding has convinced communications watchdog Ofcom to investigate BT, after the TalkTalk boss repeatedly complained about her rival's stranglehold on the fibre broadband market.

The regulator opened a case on Wednesday to probe "alleged margin squeeze in superfast broadband pricing". The allegation is that BT is setting its wholesale prices too high and its own retail prices too low.

Ofcom's investigation falls under Britain's 1998 Competition Act and Article 102 of the Treaty on the Functioning of the European Union, which is used by watchdogs to consider whether abuse of a dominant position has occurred.

Harding first complained about BT's perceived control of the fibre market last autumn when she told The Register that she believed that Ofcom should start looking at what the regulatory framework should be "to make sure that it is very clear that both parties are getting a fair price".

The TalkTalk CEO had told us that she wasn't attacking "the regime" as it currently stands, but warned that - a few years from now - "a large proportion of the country will take their phone broadband as a superfast product, and I don't think that we should live in a world where that is an unregulated product provided by the admittedly very talented and lovely monopolist [BT's Openreach boss Liv Garfield]."

Ofcom said in a competition bulletin on its website that TalkTalk had alleged that BT had...

failed to maintain a sufficient margin between its upstream costs and downstream prices, thereby operating an abusive margin squeeze.

The regulator added that it was able to proceed with a probe of BT's business practice on the basis that there were "reasonable grounds for suspecting that the Chapter II prohibition and/or the prohibition in Article 102 TFEU has been infringed." It continued: "In addition to the Chapter II prohibition in the Act, Ofcom has the power to apply Article 102 TFEU in full."

Ofcom will now consider whether BT has abused a dominant position under UK and/or EU law.

The initial phase of the probe will wind through the spring and summer months while the watchdog gathers evidence for the case.

"We expect this initial analysis to inform consideration of whether and how to proceed further with the investigation, during Autumn/Winter 2013," it said.

TalkTalk welcomed the investigation. It said in a statement:

We have long maintained that there needs to be tighter regulation in superfast broadband to ensure a level playing field and therefore deliver real benefits for consumers and businesses.

We are pleased that Ofcom is taking this matter seriously and have decided there are reasonable grounds to investigate BT's wholesale fibre pricing.

BT told El Reg that it was "disappointed" with Ofcom but added it was "confident that there is no case to answer".

The telecoms giant's chief exec Ian Livingston recently made his views clear about TalkTalk's complaint, with a sneering comment asserting that the budget telco's bosses were "copper Luddites".

He griped that TalkTalk was "trying to stop the fibre programme so they can sweat their own copper assets. They are not prepared to invest in fibre. It's a shame they want to hobble the UK economy for their own commercial reasons".

Meanwhile, BT Openreach CEO Liv Garfield previously indicated to your correspondent that she was expecting to take on a regulatory tussle over fibre broadband pricing.

"Let's see where we are in a few years. When there is absence of data there can be conspiracy theories," Garfield told us last October. "If more data is needed to evidence that it is a very good price and that we are being a good citizen as well as a good wholesaler then that will be the kind of conversation I will have to have." ®

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