Ofcom proposes first-ever block on an Openreach commercial offer

The regulator wants Openreach to withdraw its ‘Incremental New to Openreach Offer’, which gives internet service providers (ISPs) a monthly discount of up to £9.50 per customer for up to 30 months for bringing new full-fibre customers onto Openreach’s network, above their normal sign-up volumes.

Ofcom said the charges were not fair and reasonable and could harm the development of network competition. The consultation closes on August 27, with a final decision expected by the end of September.

The regulator’s concern centres on timing. Around half of UK households that can access full-fibre broadband have yet to sign up, and Ofcom argues that targeting steep discounts at exactly the new customers altnets need to grow their base, while leaving other prices unchanged, could prevent rivals from recovering costs given the low prices they already offer.

Two other notified offers escape intervention: a £50 one-off discount in areas where Virgin Media and altnets operate, and a cap on what ISPs pay for higher-speed connections. Ofcom’s provisional view is that the discounts involved are too modest to stop reasonably efficient competitors from competing.

Natalie Black, Ofcom’s Group director for infrastructure and connectivity, said Openreach must be able to compete but could not use its market power to drive other networks out of the market.

Rajiv Datta, chief executive of nexfibre, welcomed the proposed block but said it did not go far enough.

“We welcome Ofcom’s proposal to block the most egregious of BT Openreach’s proposed offers, but it does not go far enough,” Datta said.

He argued the regulator should also weigh the cumulative impact of Openreach’s other commercial offers, which he described as part of a wider strategy to prevent scaled wholesale competition from emerging.

“The regulator should also consider the cumulative effect of the steady drip-feed of other offers, which form part of a wider playbook to prevent the emergence of scaled wholesale competition and entrench BT Openreach’s dominant position,” he said, adding that nexfibre would raise these points in its formal response to the consultation.

A Virgin Media O2 spokesperson said: “We agree with Ofcom’s decision to block one of Openreach’s most aggressive offers, but this still fails to recognise the full picture of the incumbent’s tactics, the interrelated nature of the offers and Openreach’s clear intent to ‘test the waters’ with the aim of continuing to disrupt emerging competition in future.

“Ofcom should be tougher in holding Openreach’s behaviour to account as it looks to entrench its dominant position and squeeze competition against the direction set by the regulator in its recent market review. We’ll be making these points clear in our response to Ofcom’s consultation.”

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