Ofcom has agreed to deeply and thoroughly probe BT's business practices, following complaints from TalkTalk that BT's been a naughty boy, charging third-party ISPs more than it should for access to their high-speed fibre-optic network.
BT is actually two companies, sort of: BT Openreach, and BT Retail. Openreach operates the backbone network -- all the cabling, exchanges etc -- while Retail is the arm that you personally will deal with. In theory, Openreach has to sell its services to every ISP, from TalkTalk to BT Retail to some tiny startup, for the same amount of money, thus creating a nice, happy, competitive market for broadband. In theory.
In reality, BT is finding it hard to move on from its days of being the monopoly provider of telecoms. It's been in hot water for favouritism to BT Retail before, back in the heady days of 250Kbps broadband and local loop unbundling. This time, the charges are similar: TalkTalk says that BT is charging it too much for access to its fibre network, specifically that "BT has failed to maintain a sufficient margin between its upstream costs and downstream prices, thereby operating an abusive margin squeeze", which in turn unfairly favours the market leader, BT Retail.
BT, for their two pence, don't seem bovvered:
"We're disappointed that Ofcom has opened this case despite the lack of any evidence and we're confident that there's no case to answer. It would be better if the industry's and Ofcom's focus was on investing in the future of the country rather than on spurious actions designed to hold up fibre in the UK."
This isn't particularly surprising, given that BT's CEO, Ian Livingston, is on record calling TalkTalk a bunch of "copper luddites" who want to "hobble super-fast broadband for their own commercial reasons".
Of course, we'll have to wait a few months -- or longer -- to see if BT has been a naughty naughty boy. If it's found wanting, the consequences could be pretty dire for BT -- last year, it was fined £95 million for overcharging ISPs over some back-end improvements. Still, that ruling was passed down for infringements in 2004, so by the time this mess is sorted out, the entire economy will probably have collapsed. [Telegraph]
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