An investigation into BT Group's shared super-fast broadband—which companies like Sky and Talk Talk acquire to offer broadband in more areas—has lead Ofcom to announce new regulations against the group.
Ofcom announced while BT Group is not operating a margin squeeze, it must be incapable of doing so in the future, and has set new rules for the UK-based company when sharing its super-fast broadband with other providers.
“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.” Ofcom said in a statement.
BT has resisted these new regulations, citing Ofcom bundling the price with BT Sports and any future mobile bundles. BT claims these services should not be bundled into the price for broadband, even though the sports channels are offered to customers for free.
The acquisition of EE for £12.5 billion will give Ofcom more room to regulate the price, claiming if BT bundles wireless data alongside super-fast broadband, it will be regulated in the same way.
A Talk Talk spokesperson said they were "delighted that superfast broadband will be a price regulated product", but was "disappointed" that Ofcom would not change the pricing structure, allowing BT to keep the same prices for leasing broadband.
Sky also welcomed more regulation on broadband "As with any complex and untested regulation, Ofcom will need to be continually vigilant to ensure the remedy is effective when put into practice in a fast-moving market.”
BT is the largest broadband provider in the UK, still beating Virgin Media and Sky, despite the former offer faster cable broadband. The new acquisition of EE puts BT in a prime spot to win all of the UK's digital subscriptions, including mobile, TV and broadband.
However, Virgin Media and Sky are both making their own moves on O2 and Vodafone, which may mean all major broadband providers have a wireless network latched on.