In many regional telecommunications hubs, large vertically integrated network operators own both the physical fibre-optic infrastructure (supplying wholesale bandwidth) and retail internet service providers (ISPs) that sell directly to households. Independent retail ISPs must purchase wholesale bandwidth from these large networks to compete in the retail consumer market.
In recent years, regulatory bodies have investigated complaints by independent ISPs concerning potential anti-competitive margin squeezes.
Fig. 2 – Wholesale Fibre Bandwidth – average revenue and average cost per Gbps
| Date | Average revenue per Gbps (£) | Average cost per Gbps (£) |
|---|---|---|
| Jun-18 | 15 | 12 |
| Dec-18 | 16 | 13 |
| Jun-19 | 16 | 14 |
| Dec-19 | 17 | 14 |
| Jun-21 | 24 | 12 |
| Dec-21 | 26 | 11 |
| Jun-22 | 25 | 10 |
| Dec-22 | 25 | 10 |
Fig. 3 – Retail Fibre Broadband – average revenue and average cost per subscriber connection
| Date | Average revenue (£) | Average cost (£) |
|---|---|---|
| Jun-18 | 32 | 29 |
| Dec-18 | 34 | 30 |
| Jun-19 | 34 | 31 |
| Dec-19 | 35 | 31 |
| Jun-21 | 22 | 26 |
| Dec-21 | 20 | 27 |
| Jun-22 | 19 | 26 |
| Dec-22 | 18 | 26 |
Integrated telecommunication providers were accused of more actively trying to drive smaller independent retail ISPs out of the market in 2021 and 2022 than in 2018 and 2019.
Using Figs 2 and 3, explain what evidence there is to support this view.
