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BT unlikely to be fined over broadband pricing

BT's alleged illegal broadband subsidies won't attract a fine, even if proven
Written by Graeme Wearden, Contributor
Suggestions that BT could face a massive fine for selling its high-speed Internet services too cheaply seem to be wide of the mark.

Ofcom announced on Wednesday that it believes BT has infringed competition law in its pricing of broadband services. This led to speculation that BT could be fined hundreds of millions of pounds, because a company that breaks competition law can lose up to 10 percent of their turnover.

This kind of penalty isn't even on the table, it appears.

ZDNet UK understands that that the Statement of Objections sent to BT by Ofcom -- a confidential document that lays out the charges against BT and the proposed remedies -- doesn't contain any mention of financial penalties.

Both BT and Ofcom are restricted from disclosing much information because the case is still a 'live' legal issue. But sources within both organisations are playing down the probable impact of the investigation, which is likely to run into 2005.

Experts also don't believe it will have massive implications.

Stockbroking firm Cazanove published a research note on Wednesday in which it played down the importance of Ofcom's provisional finding against BT.

"Given the extent in which the retail and wholesale broadband markets have developed, and Ofcom's main focus on the wholesale access market (LLU), we suspect little will come from this specific investigation," said Cazanove.

"Whilst today's announcement might counter early signs of an improving regulatory environment, we suspect Ofcom is, to a certain extent, just going through the motions of this particular investigation," Cazanove added.

The original complaint against BT was launched by Freeserve (now Wanadoo) back in 2002, but Ofcom's investigation has also looked at recent pricing.

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