Ofcom Consult on BTSport Tweaks to FTTC Broadband Margin Squeeze Test

The UK telecoms regulator has today launched a consultation on several new tweaks to the FTTC “margin squeeze” test, which is designed to keep the BT’s “fibre broadband” prices under control by forcing them to “maintain a sufficient margin between [their] wholesale and retail superfast broadband charges“.

Ofcom’s test imposes a new Significant Market Power (SMP) requirement on BT to ensure they don’t “set the VULA margin such that it prevents an operator that has slightly higher costs than BT (or some other slight commercial drawback relative to BT) from being able to profitably match BT’s retail superfast broadband offers” (here and here).

The test also factors other aspects of BT’s retail fibre broadband pricing, such as how it bundles in free BTSport (TV) content for existing broadband customers. But crucially BT has this week announced some big changes to how they charge for BTSport (here), which will now offer European football content at the optional extra charge of +£5 per month (other BTSport viewing will remain free for their subscribers).

As such Ofcom has today said they “consider that these changes would constitute a material change of circumstances and so we are consulting on supplementary guidance regarding how we would undertake our assessment of the minimum margin during the launch period of this new proposition.” NOTE: The new EU footy BTSport deal will becoming available in August 2015.

The consultation itself is set to run until 13th July 2015, although seeing as most of the related content is new and will be offered at an optional extra cost (not bundled in for free) then we suspect that it won’t have a massive impact. Meanwhile it’s worth remembering that BT has recently tabled an appeal with the Competition Appeals Tribunal against Ofcom’s test (here).