Stuart Smith on Ofcom’s double standards

If I were Jeremy Darroch, chief executive of BSkyB, I would be incandescent at Ofcom giving BT a sympathetic hearing over its proposal to cane consumers with extra broadband charges so it can replenish its pension fund.

Ofcom appears to be operating a set of dual standards. It is perfectly prepared to consider lowering the wholesale prices that BSkyB charges its rivals for pay-TV programme rights.

On the other hand, it is equally prepared to consider raising wholesale prices when such an action would benefit BT.

There’s more. The ostensible reason for an investigation into the pay-TV market is that BSkyB operates a complex monopoly. But doesn’t BT also operate a complex monopoly in the supply of broadband (copper wire-based) infrastructure? And isn’t Ofcom open to the charge of propping up that monopoly if it lets BT’s proposal through?

The crux of the BT rationale is that it provides a vital public service, at a loss. In other words, it has had to run a pension deficit as a result of conditions beyond its reasonable control.

But isn’t this the same BT that for some years declined to pay money into its pension fund to the benefit of shareholders? And which embarked on a high-risk expansion strategy that hit its stakeholders hard?

Ofcom will be accused of a conflict of interest if it finds in BT’s favour, especially now it has become a football in the war between Rupert Murdoch and HMG. If the NewsCorp-backed Tories get in next year, Ofcom will most likely find itself history.

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