Ofcom has moved to block Openreach's 'Incremental New to Openreach' offer, ruling that the commercial arrangement breaches fairness standards and poses risks to competition in the broadband sector. The regulator determined that Openreach, given its dominant market position, must provide Ofcom and industry participants with prior notice before rolling out certain promotional deals.
The regulator first signalled its intention to reject the offer in July when it opened a consultation on multiple commercial proposals from Openreach. Following a review of industry feedback, Ofcom has now issued its final ruling.
Under the withdrawn offer, internet service providers would have received a monthly discount when signing up new full-fibre customers to Openreach's network. The discount could have reached £9.50 per customer monthly over a period of up to 30 months. Ofcom expressed concern that rival network operators would struggle to compete on equivalent terms without undermining their financial viability.
The regulator also flagged that the offer's restriction to new customers only could have made it harder for competing networks to expand their subscriber base and establish themselves as credible alternatives.
James Lowther, Managing Director for Commercial at Openreach, responded: "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."
Nexfibre, a competing network operator, characterised the decision as beneficial for market competition but suggested the regulator could have taken stronger action. A Nexfibre spokesperson stated: "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."
Virgin Media likewise welcomed the outcome but argued for tighter oversight of Openreach's conduct going forward. The company said: "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."
