British Telecom has been told off by the British regulator Ofcom which seemed to back complaints from smaller broadband provider TalkTalk that BT was abusing its dominant position in the way it priced the wholesale offering.
Ofcom said it would set up safeguards to make sure BT maintains a sufficient margin between its wholesale and retail superfast broadband charges which would allow rival providers to profitably match its prices.
BT has built a fibre network that has driven the uptake of broadband services, both by consumers and by rivals who rent the lines on a wholesale basis.
TalkTalk had complained there was not enough of a gap between wholesale price and the rate at which BT sold the product to retail customers, squeezing margins for competitors.
Under the new proposal BT would be allowed to set its wholesale fibre prices, but they must do it in such a way that others can compete profitably for superfast broadband customers.
“Ofcom’s indicative assessment is that BT is maintaining a sufficient margin under the new draft rules,” Ofcom said. “Therefore, the condition is a safeguard which limits BT’s ability to reduce retail margins in future, and ensures that any increases in BT’s costs must be reflected in its prices.”