UPDATE EU Rules Could Allow Ofcom to Remove BT’s Broadband Price Caps

Ofcom’s carefully crafted control of the United Kingdom’s market for broadband and phone services might face a challenge next month. A leaked proposal suggests that the EU’s new rules, which are designed to foster a Single Telecoms Market, could seek to remove some of the charge controls on BT’s services.

According to Reuters, telecoms operators might be able to compensate for the expected abolishment of mobile roaming charges and tougher Net Neutrality rules by allowing national regulators, such as Ofcom in the UK, to remove some of the price caps that they place on broadband services from incumbent network operators like BT (Openreach); specifically this refers to the services that BT sells on to rivals, such as TalkTalk and Sky Broadband.

ISPs like TalkTalk and Sky see such controls as vital for helping them to compete, at an affordable level, in a market where BT effectively owns and controls the underlying infrastructure. But incumbents like BT have long complained that this hurts their revenues and gives them less money with which to reinvest into the deployment of new technologies.

However the Body of European Regulators of Electronic Communications, which represents national EU telecoms regulators including Ofcom, tends to side with alternative operators and believes that it would be wrong to lift such restrictions. Ofcom’s recent Fixed Access Market Review (FAMR) made some adjustments to balance related limits and charges, but still resolved to maintain many of their existing measures. The European Competitive Telecommunication Association (ECTA), of which TalkTalk is a member, unsurprisingly agrees.

Erszébet Fitori, Director of ECTA, said in July 2014:

“Premature de-regulation represents a step back in the liberalisation process. Regulation is there to ensure that those markets which are structurally uncompetitive receive the right push towards competition. Forcing the removal of regulation prematurely will drive competitors out of the market, raise prices for users, stifle innovation and take away hard won benefits from European consumers.”

But the new rules, if adopted by the European Commission (EC), would still need to be approved by EU governments and flexibility will surely exist that would allow Ofcom’s existing approach to be maintained. Hopefully all will become clear once the text is made public.

UPDATE 18th September 2014

It’s been suggested to ISPreview.co.uk by industry figures that the Reuters article is likely to be quite wide of the mark and indeed we’re inclined to agree. The regulator probably still expects to be setting charge controls going forward, much as it has been doing for some considerable time. In short, we don’t expect a significant change to the current approach, at least not in the UK.