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December 1, 2017

Ofcom proposes crackdown on BT pricing

BT get set new measures over competitive pricing, allowing quicker rollout of full-fibre broadband.

By April Slattery

Ofcom plans to introduce new measures on BT to prevent it from undercutting other rivals planning to invest in fibre broadband in certain UK locations.

The regulator has proposed putting a new clause in its existing plans to address the “significant market power” BT has in the full fibre sector.

Ofcom’s new clause intends to prevent the former monopoly on the market, stopping BT from offering discounts for its broadband in areas where there is competition from other rivals.

The plans arose after it was found BT may be preventing or reducing competition to roll out new ultrafast network infrastructure by reducing its prices in areas where other competing companies looked to implement their products.

“While we are trying to promote competition in super fast and ultrafast broadband services, we recognise that the benefits of this provision could be undermined if BT were able to target price cuts to services currently used,” Ofcom said.

Outlined in their paper, Ofcom has said implementing the regulation will make it clear that BT is prohibited from targeting areas of competitive entry by varying its wholesale rental prices by geography.

By proposing the implementation of these measures, Ofcom is trying to encourage investment from other companies across the UK in order to offer more to residents across the UK as well as ensuring full-fibre is quickly distributed.

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If BT offer targeted discount pricing it could discourage competition, concerning Ofcom. The regulator said: “We believe that if BT were to introduce geographically targeted wholesale price cuts that would constitute undue discrimination in current circumstances and distort potential competition.”

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Offering full-fibre on larger scale to customers will enable them more options and thus more likely to take on the contract, overall it will help achieve Digital Minister Matt Hancock’s aim to become a ‘world leader’.

Furthermore, Chancellor Philip Hammond also vows the UK is committed to investing in the rollout of full-fibre broadband across the UK in his budget.

Although implementing the new measures will encourage rivals to compete in various locations the measures do not state BT cannot implement competitive pricing among areas of little competition.

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