BT Challenge Ofcom UK Decision to Cut its Wholesale Broadband Prices

The Competition Commission (CC) is to investigate Ofcom’s March 2012 decision to cut the annual price of BT’s Wholesale Line Rental (WLR) and Unbundled (LLU) broadband and telephone lines for rival ISPs, such as TalkTalk and Sky Broadband.

Ofcom originally ruled that BT’s own valuation of the charges did “not represent a reliable estimate” and called for the related prices to be slashed, which would have resulted in rival ISPs paying less for BT’s phone and broadband services. The differences weren’t big enough to have much of an impact upon smaller ISPs but the biggest providers, with millions of customers, certainly stood to benefit.

Under these changes the annual cost of a fully unbundled line (MPF) would have fallen from £91.50 +vat to £87.41 for financial year 2012/13, while a shared unbundled line (SMPF) would have fallen from £14.70 to £11.92 over the same period. Likewise BT’s own Wholesale Line Rental (WLR) also took a hit, going from £103.68 to £98.81. All the changes were due to be introduced from 1st April 2012.

At the time BT said they “disagree with some of [Ofcoms] underlying assumptions” and followed this up by lodging an appeal with the Competition Appeal Tribunal (CAT), the details of which were first revealed in May 2012. Both Sky Broadband and TalkTalk were then (31st May) granted permission to intervene in the BT appeal, while BT was similarly granted permission to intervene in the Sky/TalkTalk appeal that related to the same “charge controls” and even Everything Everywhere (Orange UK and T-Mobile) has muscled in on the action. Tit-for-tat.

The Competition Appeal Tribunal has now referred the price control matters in the BT appeal to the Competition Commission (CC) for determination by 29th March 2013. The move comes shortly after the Court of Appeal largely rejected another BT appeal (here) against an Ofcom ruling that found the operator had charged rival ISPs too much for access to its network (i.e. Partial Private Circuits – trunk segments market).

Meanwhile Ofcom has most recently proposed new controls that will “lead to [a] real-terms price reduction” of BTWholesale’s Leased Line services (here and here), which BT has already expressed “concerns” about. By contrast BT’s rivals tend to complain that Ofcom still isn’t being strict enough with BT. Credits to OUT-LAW for the heads-up.