UK’s Ofcom delays BT fibre pricing decision after CEO remarks

By Paul Sandle

LONDON (Reuters) -Britain’s telecoms regulator needs more time to consider BT’s wholesale pricing, it said on Friday after concerns were raised over the company’s boss saying its network expansion will “end in tears” for some of its competitors.

BT wants to offer discounts to internet service providers such as Sky, Vodafone and TalkTalk in return for moving customers to the national fibre network it is building.

Rivals such as Virgin Media O2 and alternative fibre providers known as altnets are investing billions of pounds to build competing networks.

However, Ofcom said on Friday that to provide certainty and stability it would not be appropriate for BT’s Openreach to launch its Equinox 2 pricing scheme, planned for April 1, until the regulator has given final approval.

Openreach said it was important that Ofcom had time to consider all feedback fully and fairly and, therefore, its discounted prices would not take effect on April 1.

It added that prices will be backdated if Ofcom approves the scheme in May.

“Our offer is a response to customers, who want lower prices and long-term certainty to help them switch to faster, more reliable broadband connections,” it said.

The regulator had said in February that it did not consider the offer from the former monopoly to be anti-competitive.

‘SIGNIFICANT CONCERN’

But comments made by BT Chief Executive Philip Jansen to the Financial Times – headlined “BT chief warns Openreach fibre push will ‘end in tears’ for rivals” – caused “significant concern”, Ofcom said.

Ofcom chief Melanie Dawes said in a letter to Jansen, published on Friday, that the regulator was committed to network competition.

“Were it to become apparent that BT is able nonetheless to distort competition in the market, we would not hesitate to take regulatory action to address this,” she said.

Jansen’s response, also published by Ofcom, said his comments had been taken out of context in the article and headline. A BT spokesperson on Friday said the company had “always believed that competition is good for customers”.

Ofcom said respondents to its consultation had referred to Jansen’s comments.

INCA, the altnets’ representative body, said Ofcom’s initial evaluation of Equinox 2 was insufficient.

“They must question why BT Group is reducing its wholesale charges whilst increasing the prices that consumers pay for broadband,” INCA said.

BT’s earlier wholesale pricing, Equinox, was challenged by altnet CityFibre, but Ofcom decided not to intervene.

Virgin Media O2, BT’s biggest network rival, has said Equinox 2 needed to be thoroughly scrutinised to ensure Openreach was not using its market power to stop providers switching to other networks.

BT shares were down more than 4% on Friday, the biggest faller in the FTSE 100 index.

(Reporting by Paul SandleEditing by Jason Neely and David Goodman)