Ofcom move could lead to broadband price cut

BT could be forced to cut broadband prices after Ofcom stepped up its investigation into the telco's charges.

The communications watchdog said it proposes to make a decision that BT has infringed Section 18 of the Competition Act 1998 and Article 82 of the EC Treaty on competition, in relation to BT's residential broadband pricing.

It has sent a 'Statement of Objections' to the telco stating the facts of the case and the action it proposes.

The ongoing investigation into BT's residential broadband pricing was initiated by Ofcom's predecessor Oftel, after a complaint by internet service provider (ISP) Wanadoo UK.

Wanadoo - formally Freeserve - first complained to Ofcom in 2002 that BT had abused its dominant market position in order to undercut rivals' prices for broadband services.

BT offers three residential broadband packages, with monthly prices of between £20 and £27, while rival Wanadoo charges between £18 and £28 for similar services.

Wanadoo claimed that because it must lease a line from BT for £13 per month it was left with between £5 and £15 for itself.

"BT will fulfill all the requirements of Ofcom's statement and BT feel the outcome will be successful," said a spokesman for the telco in a statement.

"BT has been found not guilty by Ofcom twice before and we go into the next phase of the investigation as confident as before."

Wanadoo said in a statement: "We were confident in this case and have no further comment to make."

Analysts believe that Ofcom is likely to force BT to cut its £13 monthly rental to ISPs, leaving it up to the telco's competitors to decide how to pass the savings onto customers.

BT now has the opportunity to make written and oral representations in response to Ofcom's proposed decision. These will be taken fully into account before any final decision is made.