Ofcom has moved to block one of Openreach’s proposed wholesale broadband discount schemes after provisionally concluding it could harm competition.
According to the regulator, the company’s Incremental New to Openreach Offer was “not fair and reasonable”, with Ofcom arguing that the discounts targeted customers who are key to the growth of alternative fibre networks.
Openreach had proposed discounts of up to £9.50 per customer per month for up to 30 months for ISPs signing up new full-fibre customers above their usual levels.
Ofcom said the offer could undermine sustainable competition and ultimately lead to higher prices for consumers at a time when around half of UK homes with access to full-fibre broadband have yet to switch.
If confirmed following consultation, it would mark the first time the regulator has used its powers to block a commercial offer from Openreach, BT‘s wholesale broadband network arm.
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The watchdog’s provisional view is that Openreach’s other planned offers, including incentives for higher-speed services and targeted geographic discounts, do not raise competition concerns requiring regulatory intervention.
The consultation runs until 27 August, with a final decision expected by the end of September.
Natalie Black, Ofcom’s Group Director for Infrastructure and Connectivity, said: “Openreach must be able to compete, but they cannot use their significant market power to drive other networks out of the market”.
“In reaching our final decisions on their planned offers, we will prioritise promoting sustainable competition, which is fundamental to keeping prices low in the long term and bringing better broadband to people across the UK.”
Commenting on this decision, Nexfibre CEO Rajiv Datta, said: “We welcome Ofcom’s proposal to block the most egregious of BT Openreach’s proposed offers, but it does not go far enough.
“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.
“We will make these points in our response to the consultation,” Datta added.
