OFCOM yesterday cleared BT over claims it had priced its flagship superfast broadband too high, boosting BT’s shares by almost two per cent.
TalkTalk had complained that BT was abusing its dominant position in the way it priced its wholesale offering.
BT offers its own broadband service to consumers, as well as charging rival operators such as Sky and TalkTalk to use its network.
“Ofcom has investigated TalkTalk’s complaint under the Competition Act 1998, and has provisionally decided there are no grounds for action,” Ofcom said.
Separately, Ofcom also proposed that BT’s margin, the difference between its wholesale price to rivals and the rate at which BT sold the service to its own consumers, would have to be structured in a way that did not “prevent other operators from competing profitably”.
BT said the proposal also suggested that, if it failed to maintain the correct margin, it could decide how to remedy the situation, giving it increased flexibility. TalkTalk also welcomed the proposal and said it expected the margin test to ultimately result in full price regulation.
“When Ofcom introduced the requirement for BT to offer other providers access to its fibre network, there were fewer than 100,000 superfast broadband connections provided this way. That number has now risen to 2.7m, and take-up is expected to increase further over the coming years,” said Ofcom.
“Ofcom’s proposals are aimed at ensuring that different operators can compete in the growing superfast broadband market in years to come, so that consumers benefit from competitive prices and high-quality, innovative services.”
BT’s directors also received a windfall yesterday as part of the firm’s share incentive and deferred bonus plan. Chief executive Gavin Patterson was granted 1.1m shares worth £4.2m at yesterday’s market price.
BT’s shares rose to 392.5p yesterday.