Ofcom has instructed Openreach to withdraw its ‘Incremental New to Openreach’ offer, stating the deal is not fair and reasonable and could hurt competition between broadband networks.
The regulator said Openreach, which has a big market presence, has to give Ofcom and the wider industry advance notice of certain types of commercial offers.
Ofcom first proposed blocking the offer in July, when it launched a consultation on a number of deals Openreach was planning to introduce.
However, now, it has now considered the responses and published its final decision.
The ‘Incremental New to Openreach’ offer would have given internet service providers a monthly discount for bringing new full-fibre customers onto the Openreach network.
The discount could have been as much as £9.50 per customer each month for up to 30 months. Ofcom said this could make it difficult for other network operators to match the deal while still covering their costs.
It also raised concerns that the offer was aimed only at new customers, which could make it harder for alternative networks to build up their customer bases.
Commenting on the move, Openreach, Managing Director for Commercial, James Lowther, said: “Ofcom’s decision not to approve our incremental FTTP new to Openreach offer is in line with their consultation position. We put this offer forward in good faith to help our customers compete and deliver better value for households.
“While we continue to believe the offer would have benefited customers and competition, we’ll review the decision carefully and continue to engage constructively with Ofcom and our customers.
“We’ll launch our other offers and continue to compete fairly, including our FTTP offer within the VMO2 footprint and an ethernet offer for businesses. We’ll continue to invest in the UK’s digital infrastructure, bringing growth in every postcode and helping our customers deliver for homes and businesses.”
A Nexfibre spokesperson added: “Ofcom’s decision today is a positive step towards protecting competition in the UK fibre market, although we would have liked to see the regulator go further.
“Openreach’s tactic of drip-feeding price changes via special offers needs to stop at a time when competition remains nascent. Ensuring alternative networks have the incentives to invest, grow and achieve scale will be critical to creating credible, sustainable competition.”
A Virgin Media spokesperson continued: “Although we believe the regulator could have gone further, we welcome Ofcom’s move to clip Openreach’s wings on its most aggressive offer and looking ahead it’s crucial the dominant incumbent’s behaviour is fully kept in check as meaningful wholesale competition emerges.
“More broadly, these repeated tactics show why consolidation in a fragmented, unstable fibre landscape is needed so that the sustainable, scaled challenge Openreach clearly fears fully materialises, leading to better outcomes for providers and consumers – that’s why approval of nexfibre’s acquisition of Netomnia is a crucial moment for the UK’s fibre future.
“In the meantime, we will carefully review the details of Ofcom’s decision.”
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