Ofcom has provisionally found that BT's Openreach is offering an unfairly discounted deal to new customers, and is proposing to block it. The regulator said the 'New To Openreach' offer targets 'aggressive discounting' at new customers, which could damage competition from rival broadband network providers known as altnets.
First time Ofcom steps in
If implemented, this would be the first time Ofcom has used its powers to stop a commercial offer from Openreach, BT's wholesale network arm. The watchdog said the offer is 'not fair and reasonable' and could hurt competition and drive up prices in the long term.
Details of the offer
Openreach's new customer offer gives internet service providers (ISPs) a monthly discount for bringing new full-fibre customers onto its network, with up to £9.50 offered per customer for up to 30 months. Ofcom noted that matching these discounts may not allow competitors to recover their costs given the low prices they already offer to all customers.
Importance of competition
Ofcom stated: 'Matching these discounts may not allow competitors to recover their costs, given the low prices they are already offering to all of their customers. Sustainable competition is fundamental because it means people having a choice between different networks. That choice drives companies to compete for customers through affordable prices and higher quality services.'
Market context
Openreach – owned by BT but run as a separate company – builds and maintains the UK's telecommunications network, including copper cables, fibre optics and telephone poles. It does not sell services directly to households but counts providers such as Sky and Vodafone as customers. Ofcom said the offer comes at a time when wholesale market competition is still developing, with around half of households that can access full-fibre broadband yet to sign up.
Next steps
Ofcom will consult on its proposed action until August 27 and make a final decision 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.'
