Big UK broadband fight
Key Points
- Ofcom has provisionally directed Openreach to withdraw its Incremental New to Openreach Offer, the first time the regulator has blocked a commercial offer from BT's network arm.
- The discount runs to £9.50 per customer per month for up to 30 months, worth up to £285 per new full-fibre line.
- The offer applies only to sign-ups above an internet service provider's normal run rate, the segment altnets rely on to grow.
- Ofcom cleared three other Openreach offers, including a one-off £50 discount targeted at areas where Virgin Media operates.
- Responses close on 27 August and Ofcom expects a final decision by the end of September.
Ofcom has moved to block an Openreach discount worth up to £285 per new full-fibre customer, the first time the regulator has stopped a commercial offer from BT’s wholesale network arm.
Openreach notified Ofcom of four offers in June. The one Ofcom wants withdrawn, the Incremental New to Openreach Offer, gives ISPs a monthly discount of up to £9.50 for each new full-fibre customer they bring onto the network, running for up to 30 months.
The discount does not apply to an ISP’s usual volume of new sign-ups. It applies only to the connections above that baseline.
The regulator’s provisional view holds that the charges are not fair and reasonable and could damage the development of network competition, because the discount targets exactly the customers rival networks depend on while leaving prices for everyone else untouched.
Ofcom also states that matching the discount may not let competitors recover their costs, given the prices altnets already charge across their entire customer base.
What Ofcom says happens to prices
Ofcom frames the case around long-term pricing rather than immediate bills.
The regulator argues that a genuine choice between networks forces companies to compete on price and quality, and that prices could rise over time without it.
Natalie Black, Ofcom’s Group Director for Infrastructure and Connectivity, said Openreach “cannot use their significant market power to drive other networks out of the market”. Black added that Ofcom will prioritise sustainable competition in its final decisions.
The regulator puts around half of households that can already access full fibre in the not-yet-signed-up column. Those households form the pool both Openreach and the altnets are chasing, and Ofcom argues the discount would tilt the contest for them before the wholesale market has matured.
Openreach and Virgin Media O2 disagree
James Lowther, Managing Director for Commercial at Openreach, said the company put the offers forward in good faith at a time when households are watching every bill, and that it disagrees with Ofcom’s analysis.
Lowther argued that “regulation should protect poor business models” is not a principle a competitive market should follow.
Virgin Media O2 pushed the other way, calling for tougher action and arguing that Ofcom has not accounted for how Openreach’s offers work together.
Altnet trade body INCA has taken a similar line through previous rounds. Its chief executive Paddy Paddison told reporters last November that “Openreach’s problem isn’t regulation – it’s competition”.
Ofcom will take responses until 27 August and expects a final decision by the end of September.
