Ofcom will investigate BT over its dominance in the broadband market following complaints by rival TalkTalk.
The complaint, alleges that BT has squeezed margins between its upstream costs and downstream prices. TalkTalk has complained that the telco is charging ISPs too much for access to its fibre network.
Investigations are in an early stage according to the regulator. Ofcom said that claims will be looked into before deciding if BT has a case to answer for.
"In the initial phase of the investigation in Spring/Summer 2013, we expect to gather further information using our powers under the Competition Act 1998, and to analyse this information," said the regulator in a statement.
"We expect this initial analysis to inform consideration of whether and how to proceed further with the investigation, during Autumn/Winter 2013."
BT said that it was disappointed that Ofcom has opened the case and claims there is no evidence.
"It would be better if the industry's and Ofcom's focus was on investing in the future of the country rather than on spurious actions designed to hold up fibre in the UK," BT said in a statement.
However, TalkTalk welcomesd the news to investigate BT and said that it has "long maintained that there needs to be tighter regulation in superfast broadband to ensure a level playing field and therefore deliver real benefits for consumers and businesses."
"We are pleased that Ofcom is taking this matter seriously and have decided there is reasonable suspicion to investigate BT's fibre pricing," a TalkTalk spokesman said.
BT is currently spending 2.5 billion of its own money to connect around two-thirds of the UK to its fibre network by 2014.
