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BT has lodged an appeal against Ofcom’s new 'margin squeeze' test, which is designed to ensure the firm's wholesale fibre customers can make reasonable profits.

The telecoms giant wants the Competition Appeals Tribunal to overrule the new regulation, which aims to protect BT's rivals - such as Sky and TalkTalk - which use its wholesale network, reports the Telegraph.

BT believes the margin squeeze test, in its current form, will hamper its efforts to challenge Sky in the pay-TV market, particularly where sports broadcasting is concerned.

The test - which measures the difference between wholesale and retail prices for fibre broadband - has been designed by Ofcom to take BT's spending on sports rights into account.

The regulator said that, because BT broadband subscribers receive free access to BT Sport, these costs should be included in any calculations.

But the upshot of this is that, should BT increase its spending on sports rights, it could be forced to lower its wholesale broadband prices to pass the margin squeeze test.

And this reality is a major concern for the broadband provider.

A BT spokesperson said the company is not opposed to the principle of Ofcom's test - which, incidentally, BT would pass at present - but it believes the current proposal is "flawed".

“Ofcom has not adequately addressed the concerns of the European Commission, who said BT should be allowed more flexibility to recover its sports costs over a longer period," he stated.

"The effect is to provide unwarranted regulatory protection to the likes of TalkTalk and Sky in supplying their super-fast broadband services, while at the same time making BT’s entry into sports broadcasting even more challenging."

The BT representative said Ofcom's proposed regulation is "worryingly lopsided", given that there has been "little action to address Sky’s continuing dominance of the pay-TV market".

The appeal process is expected to take at least one year, during which time the margin squeeze test will continue to apply.

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