Ofcom has fired a warning shot to BT Group over the pricing of its consumer high-speed broadband internet service, which could see the telecoms operator forced to raise its prices.
The UK media and telecoms regulator yesterday sent a statement of objections to BT, indicating that the group might have infringed UK and EU laws with its residential broadband pricing.
Given its dominant position in the UK market, BT is prevented from adopting predatory pricing of its retail broadband service.
Yesterday's objections follow a complaint made by Freeserve - the internet service provider that now operates as Wanadoo - to Oftel, the former UK telecoms regulator. This complaint was made in March 2002 when BT was charging £29.99 (€44) a month for its basic consumer broadband service.
BT's broadband pricing has since been reduced as wholesale broadband prices have fallen. Its current entry-level broadband service, which provides users with access to the internet at speeds around 10 times faster than traditional dial-up modems, costs £19.99 a month.
Ofcom refused to give details of the nature of its objections yesterday but it is thought its investigation focuses on BT's broadband pricing from March 2002 up to its current broadband prices.
If Ofcom finds against BT, it can force it either to raise its retail broadband prices or lower its wholesale prices. It can also impose fines of up to 10 per cent of BT's turnover, although it is understood that the regulator has so far refrained from threatening BT with a fine.
Analysts said it was unlikely Ofcom would force BT to raise its prices, indicating that the regulator would favour further cuts to wholesale prices.
Nevertheless, yesterday's move by Ofcom was seen by analysts as a sign that the regulator, which only assumed its full powers last December, is taking a much tougher stance on BT than its predecessor, Oftel.
In November 2003, following Freeserve's original complaint, Oftel determined that it could find no evidence of a "margin squeeze" with BT's broadband pricing.
