BT is braced for a blow to its dominance of superfast broadband, with regulators poised to unveil a test of whether its pricing means its rivals and wholesale customers, BSkyB and TalkTalk, are unable to make reasonable profits in the burgeoning market.
Ofcom is expected to publish proposals imminently that will gauge whether the difference between BT’s wholesale and retail pricing of superfast broadband is narrow enough to amount to a “margin squeeze” on competitors.
For me this is a massive advertisement to completely split Openreach off from the rest of BT. A lot of industry watchers think that part of the reason Openreach's network ambitions were scaled back was to free up capital to fund free footie for BT's Retail customers.
Separating Openreach entirely also eliminates any opportunity for 'creative accounting' to allow Openreach revenues to subsidise the links above them in the chain, and Retail to benefit from that subsidy to offer cheaper deals.
I hope, however, that this ends up with the retail price of BT's offerings going up rather than the wholesale price going down. It could be said that it's quite cheap enough as it is and I would much rather see Ofcom press BT at retail level, not discourage investment at Openreach level, something that really doesn't need discouragement.