Ofcom Finalises 2002 BT Complaint
Posted: 20th Jun, 2006 By: MarkJ
Ofcom is finally preparing to rule on its four year investigation into BT's broadband pricing, which was sparked by a complaint in 2002 alleging unfair (anti-competitive) practices:
If found guilty, BT could be fined up to 10 percent of its turnover, although it is unlikely that hefty financial penalties would be imposed.
The complaint was originally brought back in April 2002 by Freeserve, after BT cut the cost of its wholesale ADSL products, which are resold to consumers by ISPs. Freeserve claimed that BT was selling these products to its Openworld retail arm at unfairly low prices, which helped them to undercut rivals in the marketplace. Such a "margin squeeze" would be illegal.
Freeserve's original complaint was twice rejected by Oftel, the telecoms regulator at the time. But Freeserve, which has subsequently been rebranded first as Wanadoo and then Orange, appealed at the end of 2003, claiming that Ofcom had interpreted the law incorrectly. Ofcom which superseded Oftel has been mulling the issue over ever since. In September 2004 it issued a provisional ruling that BT had infringed competition law, which BT contested.
The ZDNet item offers a good summary of the situation, while Ofcom has its own progress page HERE. Presently it is not known when Ofcom will issue its ruling, yet sometime in July would be a fair bet.
The market has changed considerably since 2002 and no doubt Ofcom will have to factor that into its equation.
If found guilty, BT could be fined up to 10 percent of its turnover, although it is unlikely that hefty financial penalties would be imposed.
The complaint was originally brought back in April 2002 by Freeserve, after BT cut the cost of its wholesale ADSL products, which are resold to consumers by ISPs. Freeserve claimed that BT was selling these products to its Openworld retail arm at unfairly low prices, which helped them to undercut rivals in the marketplace. Such a "margin squeeze" would be illegal.
Freeserve's original complaint was twice rejected by Oftel, the telecoms regulator at the time. But Freeserve, which has subsequently been rebranded first as Wanadoo and then Orange, appealed at the end of 2003, claiming that Ofcom had interpreted the law incorrectly. Ofcom which superseded Oftel has been mulling the issue over ever since. In September 2004 it issued a provisional ruling that BT had infringed competition law, which BT contested.
The ZDNet item offers a good summary of the situation, while Ofcom has its own progress page HERE. Presently it is not known when Ofcom will issue its ruling, yet sometime in July would be a fair bet.
The market has changed considerably since 2002 and no doubt Ofcom will have to factor that into its equation.
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