August 29, 2019 / 4:52 PM / 23 days ago

Vodafone UK appeals move to ease price caps on BT business lines

LONDON (Reuters) - Vodafone UK (VOD.L) is seeking to overturn a move by regulator Ofcom to relax restrictions on how much BT (BT.L) can charge for business fibre connections, saying it will result in higher bills for companies, universities and hospitals.

FILE PHOTO: A branded sign is displayed on a Vodafone store in London, Britain May 16, 2017. REUTERS/Neil Hall

Ofcom had already eased price regulation in central London in a review in 2016, saying BT did not have significant market power.

It has now relaxed the restrictions in other cities where BT faces two or more rivals, such as Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester.

It is also changing the basis for the price cap from one which is cost-based to a flat rate on the leased lines, which provide high-speed data connections for offices, mobile base stations and broadband access networks.

Ofcom said the changes, which were finalised in June, give BT’s rivals a stronger incentive to build their own networks.

Vodafone however said businesses and public sector organisations faced paying an extra 230 million pounds over the next 20 months because of the changes.

“We are not inherently pro-regulation, we believe in free markets, but where one company has significant market power, regulators need to be extremely careful before deciding to lessen regulation,” Vodafone UK’s general counsel and external affairs director Helen Lamprell told reporters.

“The consequences of Ofcom’s approach risk inflicting lasting damage on the UK’s digital infrastructure transformation at this crucial point.”

The new regime would also increase the cost of rolling out masts for new 5G networks, she said.

Vodafone and rival TalkTalk (TALK.L) have lodged an appeal with the Competition Appeal Tribunal, arguing that the regulator’s decision was not based on evidence of how the markets works.

It did not, for example, reflect the 60% to 70% market share BT retained in central London, they said.

An Ofcom spokesman said the rules had been designed to boost investment in high-speed data links, which were vital to the UK being a world leader in fibre and 5G technology.

“This litigation threatens to hold back that progress for people and businesses, so we’re extremely disappointed some companies have chosen to put commercial interest ahead of the national interest,” he said.

BT declined to comment.

Reporting by Paul Sandle; Editing by Jan Harvey

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