By Ian Walker
LONDON--The U.K. Office of Communications said Thursday BT Group
PLC (BT.A.LN) must maintain a sufficient margin between its
wholesale and retail superfast broadband charges to allow other
providers to profitably match its prices.
The regulator made the rule as it set out new measures to
promote competition and investment in the growing market for
superfast broadband. However, the measures are subject to review by
the European Commission, upon which the regulator expects to
publish a final statement in February, it said.
The new regulatory condition would start from March and remain
in place until March 2017, when the current regulatory review
period ends, Ofcom added.
"The new pricing rule would preserve BT's current flexibility to
set its wholesale fiber prices, which in turn provides an incentive
for future investment by the company in its fiber network," the
regulator said.
At the same time, it will mean BT can't set prices in such a way
that might prevent other operators from competing profitably for
superfast broadband customers.
BT is currently the largest retail provider of fiber broadband
services over its network, but is required to allow other operators
to use its network to sell superfast broadband to consumers under a
process known as 'virtual unbundled local access'.
Responding to the announcement TalkTalk Telecom Group PLC
(TALK.LN) said it welcomes the move. However, it believes consumers
should be disappointed that the proposals won't lead to an
immediate price reduction, a spokesperson said in an e-mailed
statement.
"Broadband is critical to our future. This must be the beginning
of the journey to bring down superfast broadband pricing and make
consumers and Britain better off," the spokesperson added.
-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749
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