Brussels criticises British plan to regulate BT fibre network

LONDON, Feb 19 (Reuters) - The European Commission has criticised British regulator Ofcom's plan to monitor the price the country's dominant telecoms operator BT Group Plc (LSE: BT-A.L - news) charges rivals to access its superfast fibre network.

Peers such as TalkTalk have long complained that BT overcharges for wholesale access to its infrastructure, helping it fund additional services such as sports programming which it gives to customers free as part of a broadband bundle.

They had welcomed a move by Ofcom in January to apply a margin-squeeze test on BT, that would measure the gap between the wholesale price it charges rivals and the retail price it charges its customers, to make sure there is a sufficient margin for competitors to make a profit from the infrastructure.

However the European Commission in a letter to Ofcom said the proposed test did not take into enough consideration the high costs BT has to pay in a highly competitive market to secure rights such as Premier League soccer.

It said BT should be allowed more flexibility in how it spreads the costs than the six-monthly reference period proposed by Ofcom.

"Ofcom's proposed approach lacks the necessary flexibility in particular with regards to the treatment of costs for BT Sports," it said.

"The Commission considers that the proposed static approach unduly limits BT's commercial activity with regards to a market in which it does not have SMP (significant market power)."

BT said it was encouraged by the response and expected the proposed test to be amended accordingly.

"The test, as currently proposed by Ofcom, is fundamentally flawed," it said in a statement. "It is also unnecessary given BT's fibre network is open to all companies to use on equal terms."

A spokesman for Ofcom declined to comment.

(Reporting by Kate Holton and Paul Sandle; Editing by David Holmes)