Broadband battle breaks out

Thursday 23 June 2016

JT is being accused of stifling competition through the rates it charges other operators to use its broadband network.

The telecoms regulator (CICRA) is demanding that JT revise its pricing to rival providers and submit lower rates to the watchdog organisation for approval within two months.

However, JT has hit back hard at the regulator, accusing it of taking, "...two years to come to the wrong conclusion."

JT owns the broadband network, and charges others operators to use that network, so that they can sell services on to their customers. 

But CICRA says that JT has set its price point for competitors, “...at levels that mean its rivals are struggling to be able to effectively compete."

“Where one competitor holds a dominant position, and the margin between the wholesale price it sets and the price competitors can sell their product (retail price) is excessively narrow then it is deemed a ‘margin squeeze’,” CICRA Chief Executive Michael Byrne said.

“Margin squeeze, if allowed to continue, will choke off JT’s rivals and return the market to a monopoly - reversing progress made to introduce competition over the last decade.”

But JT's Corporate Affairs Director, Daragh McDermott has hit back, suggesting that JT is being unfairly treated, and CICRA doesn't understand the market:

“Once you get past the claims being made by CICRA, there is actually a crucial fact missing from their media statement: JT’s prices at both a wholesale (to other operators) and a retail (to consumers) level are either the same, or lower, than those charged by the network owner in Guernsey.

"So on that basis, how can the Channel Islands’ regulator accuse us of reducing competition in Jersey, but not make the same allegation against the network owner in Guernsey? People want high speed broadband, at a great price, and that’s what JT offers with 50 Mb/s for around £23 a month (less than a pound a day).

"Despite that very low price, we are also offering a substantial margin to our competitors, and investing more than £41m in completely rebuilding the broadband network to make sure it is right for the future." 

CICRA’s investigation into JT’s pricing was sparked by changes the company made to wholesale and retail prices in 2014. JT must now satisfy the regulator that the alleged problem has been remedied within the 60-day deadline.

“Broadband is a vital technology – it gives us access to the range of services we rely on daily including online shopping, entertainment and news, managing our finances and social networking,” Mr Byrne said.

“It is also a foundation for the future prosperity of the island and is critical to economic growth so the market has to work well. Protecting a healthy, thriving competitive market is key to CICRA’s work in this area.”

Today's disagreement is the latest in a series of rows between JT and the regulator, one of which ended up being settled by the Royal Court.