Ofcom market reviews and the significant market power regime

When Ofcom designates a provider with Significant Market Power (SMP), it imposes remedies that constrain how that provider deals with competitors and access seekers. If you buy wholesale services from an SMP-designated operator, those remedies determine what you can demand, what price you should pay, and what conduct you can challenge. SMP designation is the telecoms equivalent of dominance in competition law. The remedies are there for the access seeker’s benefit, and the access seeker is the party that has to check the operator is meeting them.

Trigger situation

You buy wholesale access, leased lines or interconnection from an SMP-designated operator and the terms are unreasonable or discriminatory. The SMP operator offers selective discounts to some access seekers but not others, or bundles services in ways that circumvent non-discrimination obligations. You suspect the SMP operator is pricing below cost or cross-subsidising retail services with wholesale revenue. You are negotiating a new access agreement and need to understand what the SMP remedies require the operator to offer. You want to complain to Ofcom about an SMP operator’s conduct or bring a competition law claim based on abuse of dominance. You are entering a market and need to understand what wholesale access you can obtain and on what terms. An Ofcom market review is underway and you want to influence the remedies imposed on the SMP operator.

Why it matters now

Ofcom conducts multiple market reviews on different cycles. Ofcom published the Telecoms Access Review 2026-31, Promoting competition and investment in fibre networks, on 17 March 2026. The SMP conditions it imposes on BT are in Volume 7 Part A and took effect on 1 April 2026. They cover wholesale local access, leased lines access and inter-exchange connectivity, and physical infrastructure, and they run until Ofcom revokes them by a further notification under section 48(1) of the Communications Act 2003 rather than expiring in 2031. Ofcom reviews call termination markets separately, setting regulated charge controls for fixed and mobile termination rates. It reviews business connectivity markets, mobile access markets, and wholesale voice markets. Each review operates on its own timetable and produces its own SMP designations and remedies. Designations and remedies in those other markets bind the same operators and reach the same access seekers.

The TAR 2026-31 changes what BT must offer and at what price. Its access condition does not extend to a request for a new form of copper-based network access unless that form facilitates the migration of end users to ultrafast broadband services, and its charge controls on wholesale local access operate on weighted average charges across each relevant year. For access seekers, these changes affect the terms on which you can obtain wholesale services for the next five years. Ofcom can modify remedies within a review period in response to competition concerns. If an SMP operator changes its behaviour, Ofcom can intervene.

SMP designation is the telecoms-specific equivalent of dominance under competition law. An SMP operator that discriminates, refuses access without justification, or prices in ways that squeeze competitors’ margins may be in breach of both its SMP obligations and the Chapter II prohibition under the Competition Act 1998. This dual enforcement route gives access seekers options: complain to Ofcom under the SMP regime, or pursue a competition law claim (or both).

Common SMP regime failures

The SMP operator’s commercial terms should be checked against what the remedies actually require before they are accepted. SMP remedies are detailed and prescriptive. They specify what the operator must offer, at what price, on what terms, and with what transparency. An SMP operator’s standard offer may not reflect the full scope of what the remedies require it to provide. An access seeker that knows what the remedies require can hold the operator to them in the negotiation.

Discriminatory conduct should be challenged. Where Ofcom has imposed a non-discrimination condition, the duty is not to discriminate unduly. Under section 87(6)(a) of the Communications Act 2003, and Condition 4.1 of the Telecoms Access Review 2026-31, the designated operator must not unduly discriminate against particular persons or descriptions of persons, and it may be deemed to have discriminated unduly if it unfairly favours its own activities to a material extent so as to place a third party at a competitive disadvantage. A difference in terms is not automatically a breach. A selective discount offered to some access seekers and not others, a volume commitment only the largest competitors can meet, a technical requirement that favours the operator’s own systems, and bundled pricing that makes wholesale and retail terms hard to compare each raise a non-discrimination question. Each of these may breach the non-discrimination obligation.

Pricing disputes are regulatory matters, not commercial negotiations, once a remedy sets the price. Where a charge control applies, the price is set by the condition rather than by negotiation, but whether a particular charge breaches it depends on the form of the control. The Telecoms Access Review 2026-31 controls wholesale local access charges as weighted average charges across each relevant year, and controls physical infrastructure charges by requiring each charge, averaged over the year, to be reasonably derived from the cost of provision. If the operator structures charges in a way that inflates the effective price (through connection fees, minimum commitments, or ancillary charges), the access seeker can challenge this with Ofcom. Treating the price as negotiable when it is regulated weakens the access seeker’s position.

An SMP obligation and a General Conditions obligation have different scopes and should not be conflated. An SMP obligation applies only to the designated provider in the relevant market. A General Condition obligation may apply more broadly. The two regimes interact but are distinct. Ofcom decides at an initial assessment stage whether to open an investigation, so a complaint that identifies the wrong obligation gives it less to act on.

Delay in complaining to Ofcom weakens an access seeker’s position. Discriminatory terms, once they are in contracts, systems and pricing structures, are harder to unwind the longer they stand. Early engagement with Ofcom, even at the informal stage, is more effective than delayed formal complaints.

The Advisor’s Perspective

SMP regulation exists to protect access seekers. The remedies are designed to ensure that operators with market power cannot exploit that position. But remedies only work if access seekers enforce them. In my view, the remedies work only for the access seeker that knows what they require, monitors the operator against them, and escalates to Ofcom when the operator falls short.

SMP designation maps closely to dominance. Conduct that breaches an SMP non-discrimination obligation will often also constitute an abuse of a dominant position under the Competition Act 1998. This gives access seekers a choice of enforcement route and, in some cases, the ability to claim damages.

SMP compliance in practice

The work starts with the designations that reach the access seeker’s own market: wholesale local access, leased lines, call termination, business connectivity or another. The remedies imposed on the operator it buys from are then read one by one, for what the operator must offer, what it may charge, and what non-discrimination obligations it must meet.

The operator’s offered terms are then compared against what the remedies require. Where the terms fall short, the access seeker can negotiate directly, supported by a clear statement of what the remedies require, engage Ofcom informally, or complain formally. Which of those works best depends on the conduct and on what the access seeker needs from it.

Where the operator’s conduct raises competition law concerns, the questions are whether it amounts to an abuse of dominance (margin squeeze, discriminatory pricing, constructive refusal to supply), and whether a complaint to the CMA or a damages claim is the better route. Each route has its own evidential requirements.

A market review is the point at which an access seeker can shape the framework for the next five years. A submission supported by economic evidence and market data carries weight with Ofcom on the remedies it decides to impose, and the access seeker can put its position directly to Ofcom during the review.

An acquirer of an operator that depends on wholesale access from an SMP provider is buying the terms of that access with it. The acquirer models the effect of the current remedies on the target’s economics, and the risk that those remedies change during the investment period.

When to instruct

An access seeker that is satisfied with the terms it receives from an SMP operator and faces no pricing or discrimination issues does not need specialist input. Specialist advice earns its cost where an access seeker is negotiating access terms and needs to know what the remedies require; suspects discrimination, or the circumvention of a non-discrimination obligation; is paying more than the regulated price, or paying it through inflated ancillary charges; wants to complain to Ofcom about an operator’s conduct, or to bring a competition law claim on the same conduct; wants to influence the outcome of a live market review; or is acquiring or investing in a business that depends on wholesale access from an SMP provider.

What SMP work covers

SMP work for an access seeker runs from the remedies that apply to the operator it buys from, through a comparison of the operator’s offered terms against those remedies, to the identification of any breach of a non-discrimination obligation and the enforcement options that follow. It covers a pricing dispute where the operator charges above the regulated price or inflates the effective price through ancillary charges, a complaint to Ofcom about the operator’s conduct, and a competition law claim where that conduct amounts to an abuse of dominance. It also covers submissions to an Ofcom market review consultation on the remedies to be imposed, the modelling of the commercial effect of those remedies for investment and transaction due diligence, and, for an operator that is itself designated, its own SMP compliance obligations.

FAQs

We buy wholesale broadband access from an SMP-designated operator. What are we entitled to?

What you are entitled to depends on the conditions Ofcom imposed on that operator in the relevant market review, not on a general SMP standard. Under the Telecoms Access Review 2026-31, BT must provide network access to a third party that requests it reasonably and in writing, must publish a reference offer and must provide access at the charges, terms and conditions set out in it, must not unduly discriminate, including by unfairly favouring its own activities, and must comply with the charge control that applies to the service in question. If the operator’s terms do not meet these requirements, you can challenge them with Ofcom. You should review the reference offer and compare it against the specific conditions imposed in the relevant market review (for wholesale local access, the Telecoms Access Review 2026-31).

The SMP operator is offering volume discounts to our larger competitor but not to us. Is this lawful?

It may not be. SMP operators are subject to non-discrimination obligations. Offering volume discounts to some access seekers but not others may breach those obligations, particularly where the discount structure is designed so that only one or two competitors can qualify. The test is whether the terms are objectively justified. If the discount reflects genuine cost savings from volume, it may be defensible. If it is structured to favour particular competitors or to exclude smaller access seekers, it is likely discriminatory. You should seek advice on whether the discount structure breaches the non-discrimination remedy and consider raising the issue with Ofcom.

Can we bring a competition law claim as well as an Ofcom complaint?

Yes. SMP designation maps closely to dominance under competition law. Conduct that breaches an SMP non-discrimination or pricing obligation will often also constitute an abuse of a dominant position under the Chapter II prohibition of the Competition Act 1998. You can complain to Ofcom (which has concurrent competition powers in telecoms) or to the CMA. You can also bring a private damages claim in the Competition Appeal Tribunal, supporting the litigation team as disputes co-counsel where proceedings are issued. The choice of route depends on what outcome you want: Ofcom can impose remedies and penalties; a damages claim can recover your financial losses. In some cases, pursuing both routes in parallel is appropriate.

An Ofcom market review is starting. How can we influence the outcome?

Market reviews are the moment when Ofcom decides which operators have SMP and what remedies to impose. As an access seeker, you can make submissions to the consultation setting out your experience of the market, the access terms you face, and what remedies you need. Ofcom takes seriously submissions that engage with its methodology and are supported by market evidence. If you have concerns about access terms or the risk of access being withdrawn, the market review is the time to raise them. We can help you prepare a submission that influences Ofcom’s final decision on remedies.

We suspect the SMP operator is engaging in a margin squeeze. What can we do?

A margin squeeze occurs when an SMP operator sets wholesale access prices and retail prices such that an efficient competitor cannot profitably compete at the retail level. This is both a potential breach of SMP obligations and an abuse of dominance under competition law. You should gather evidence of the wholesale price you pay, the retail prices the operator charges to end customers, and the costs an efficient competitor would incur. If the margin between wholesale and retail is insufficient to cover those costs, a margin squeeze may exist. You can complain to Ofcom, to the CMA, or bring a damages claim. Margin squeeze cases are fact-intensive and require economic analysis, but they can result in material remedies and damages awards.

Representative experience

Recent and representative matters include:

• Advised a national operator on its response to Ofcom’s Wholesale Fixed Telecoms Market Review, including submissions on geographic market definition and proposed access remedies.
• Supported a challenger fibre provider in negotiating regulated wholesale access terms with the incumbent SMP operator, including pricing disputes under the charge control framework.
• Prepared a consultation response on behalf of a wholesale customer challenging Ofcom’s proposed SMP remedies in the business connectivity market.
• Advised on the regulatory due diligence aspects of an acquisition where the target held SMP-regulated wholesale assets, assessing the impact of existing and forthcoming market review obligations.
• Supported an operator through a Competition Appeal Tribunal challenge to an Ofcom SMP determination, coordinating with economic experts on market definition evidence.

Related telecoms regulation pages

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Am I regulated?
Ofcom General conditions of entitlement
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Code Powers and access to land
Spectrum
Lawful intercept and the Investigatory Powers Act 2016
Telecoms Security
Ofcom Licence Fees
Ofcom: Advice for Operators, Investors and Platforms
Interconnection regulation
Complaints and investigations
Connected Vehicles and IoT Regulation
EU Digital Networks Act

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Frequently asked questions about SMP designation and market reviews

What is SMP regulation?

SMP regulation is Ofcom’s ex-ante framework for assessing competition in wholesale telecoms markets, determining significant market power and imposing targeted obligations on SMP providers.

How does Ofcom decide if a provider has SMP?

Ofcom identifies the market, carries out a forward-looking analysis of it and asks whether the provider enjoys a position that amounts to or is equivalent to dominance, a term construed as it is under section 18(1) of the Competition Act 1998 (Communications Act 2003, sections 78 and 79). It may identify a market for this purpose only where high and non-transitory barriers to entry are present, the market structure does not tend towards effective competition, and competition law alone would not adequately address the market failure.

What remedies can Ofcom impose for SMP?

Remedies include access obligations, non-discrimination, transparency, price controls, accounting separation, quality-of-service standards and, in rare cases, functional separation.

How often does Ofcom carry out market reviews?

Section 84A of the Communications Act 2003 requires Ofcom to review a market power determination within five years of the publication of the notification that made it, a period Ofcom may extend by up to one year where it publishes its reasons for considering a longer period exceptionally justified. Ofcom may review a market sooner.

Can Ofcom’s SMP decisions be appealed?

Yes. A person affected by the decision may appeal to the Competition Appeal Tribunal under section 192 of the Communications Act 2003. Section 194A(2), inserted by the Digital Economy Act 2017, requires the Tribunal to decide the appeal by applying the same principles as a court would apply on an application for judicial review.

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