Ofcom Probes BT's Compliance With Obligations As Broadband Universal Service Provider; Stock Down

(RTTNews) - Shares of BT Group plc (BT_A.L, BT) were losing around 4 percent in London trade after the UK Office of Communications or Ofcom announced Thursday that it has opened an investigation in relation to BT's compliance with its obligations as a broadband universal service provider.

The UK regulator designated BT as a Universal Service Provider after the UK Government in 2018 introduced legislation for a broadband 'universal service obligation' or USO, which gives homes and businesses the right to request a decent broadband connection.

Ofcom imposed regulatory conditions setting out how BT must provide USO connections to eligible consumers.

Under the legislation, customers can request a USO connection from BT if they cannot currently receive affordable broadband services with speeds of at least 10 Mbit/s and upload speeds of at least 1 Mbit/s.

Upon receiving such a request, BT must assess the costs of providing that connection and, where this is less than 3,400 pounds, BT must provide the connection. If the assessed costs exceed that amount, BT must also provide the connection if the customer is willing to pay the excess costs.

As required by the legislation, BT must take into account that costs may be shared among other customers who could use the same infrastructure. According to Ofcom, BT must apply this methodology to calculate the costs of each requested connection.

The agency now said that it is concerned that BT may not be complying with the regulatory conditions correctly where it assesses excess costs for a given connection. This could result in some customers' quote for a connection being higher than necessary, even though the cost of some connections will be high due to the remoteness of many of these premises.

Ofcom will now gather evidence, and it expects to determine next steps before the end of the year.

In London, BT shares were trading at 102.20 pence, down 3.54 percent.