Fixed Access Market Reviews: Approach to the VULA margin

Draft statement published 15|01|15

About this document

This is a draft statement which is being notified to the European Commission for comments.

We set out in draft the obligations we are imposing on British Telecommunications plc (‘BT’) to regulate the margin between BT’s wholesale and retail superfast broadband prices.

Superfast broadband forms a growing part of the overall broadband market and we expect it to become more important, with take-up increasing over the next couple of years. Ensuring that there is effective retail competition in superfast broadband is therefore important to maintaining the UK’s competitive retail broadband market, which benefits consumers.

Communication providers have access to BT’s next generation, superfast broadband network through a wholesale product called Virtual Unbundled Local Access (‘VULA’).

We are concerned that BT could distort the development of competition in superfast broadband by setting an insufficient margin between its wholesale VULA and retail superfast broadband prices. Therefore, this statement sets out detailed requirements on the minimum margin that BT must maintain. Our approach is designed to ensure that other communication providers have sufficient margin to be able to compete with BT in the provision of superfast broadband packages to consumers. It also continues to provide BT with pricing flexibility for VULA that preserves its investment incentives in relation to superfast broadband.

Once this notification process is complete, we will take utmost account of any European Commission comments and then publish a final Statement to bring our decision into effect.