Ofcom rejects TalkTalk margin squeeze complaint against BT Retail
The TalkTalk complaint was that there the level of margin between the retail price of BT Infinity services and wholesale pricing that TalkTalk has to pay was insufficient for TalkTalk to compete in the retail market.
The update issued today by Ofcom is pretty short and boils down to Ofcom saying there is no grounds for action. While this means the complaint has been closed down, there are new rules being put in place to satisfy the EU telecoms framework that will mean closer scrutiny is applied to the margin between wholesale pricing and retail.
"We are pleased that Ofcom has rejected TalkTalk’s competition complaint and shown that BT’s fibre pricing is completely fair.
The consultation is welcome. We hope it results in regulatory clarity and certainty, and discourages spurious claims such as that made by TalkTalk.
There is strong competition in the UK broadband market and we are confident our pricing will pass any regulatory test that may be put in place. It is important that Ofcom encourages investment as well as competition, and recognises the full costs involved in deploying fibre.BT statement in response to Ofcom announcement
As far as consumers are concerned, TalkTalk retails its lowest priced unlimited FTTC service for £13.50 per month (plus line rental) and BT Retail Infinity 1 is £23 per month (plus line rental) when none of the initial sign-up offers are taken into account. A chunk of the difference is down to the added extra's with the BT Retail services e.g. free WiFi access when out and about, BT Sport, Cloud storage etc.
We have seen lots of people air the view that it is unfair for BT Retail to be offering free sports programming when the group as a whole is receiving gap funding to increase the roll-out of fibre based broadband, but in a market where all the other three largest providers have some form of video content package it would be even more surprising if BT Retail was to ignore the content arena as a way of getting more customers.