BBC News Online has a piece written by Jane Wakefield on the recent price hikes by BT Wholesale for its BT IPStream Office packages. There appears to be a tacit admission that BT may have got its calculations wrong, and if this is proven then BT will adjust its pricing once again. This comes after several weeks of lobbying by interested parties and other bodies.
The original Margin Squeeze Test (MST) as laid out by Ofcom was designed to ensure that the BT Group does not use its dominate position to hold back the entry of new players to the LLU and Datastream markets. Unfortunately by allowing BT to increase prices a possible effect would be the reduction of the number of service providers, particularly the smaller ones who aim to provide a more personal service to SMEs. The UK broadband market is very competitive at the retail end, the trick is to find ways to encourage who infrastructure competition at the wholesale level.
The price rises just applied to the Standard based pricing model, which actually is likely to disappear a few months after the Usage Based Pricing model has been launched by BT Wholesale. So there is a danger that if the debate on the MST continues too long it will simply run out of time. To date there has been little in terms of public statement of how the smaller ISPs perceive UBC and the CBC pricing models. One certainty as the UK broadband market grows in size is that self-interest and political style lobbying will become more common. The regulator Ofcom needs to ensure that the needs of consumers and businesses are not overlooked due to pressure from any one lobbying group.
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