BT’s Openreach has been ordered by Ofcom to withdraw a heavily discounted broadband offer after the UK communications regulator concluded that the scheme could undermine competition in the rapidly expanding full-fibre market.
The watchdog said it had taken the unusual step of blocking Openreach’s “Incremental New to Openreach” offer after determining that the terms were “not fair and reasonable”.
The offer would have provided internet service providers with discounts of up to £9.50 a month for as long as 30 months when they moved new full-fibre customers on to Openreach’s network.
Ofcom said the scale and duration of the discount risked giving Openreach an advantage that competing broadband network operators, known as alternative networks or “alt nets”, would struggle to match while still covering their costs.
“We have determined that the large discount involved – up to £9.50 per customer for up to 30 months – may mean that other reasonably efficient operators couldn’t match it while also recovering their costs,” Ofcom said.
The regulator’s intervention highlights the increasingly intense competition between Openreach and a growing number of independent fibre networks that have invested billions of pounds in rolling out competing infrastructure across Britain.
Ofcom said the problem was compounded because the offer was specifically targeted at acquiring new customers.
“In addition, the offer is aimed exclusively at new customers, so could stymie alt nets’ ability to scale up their customer base at a time when around half of households that have access to full-fibre broadband are yet to sign up.”
The regulator said allowing the offer to proceed could distort the market at a crucial stage of the UK’s fibre rollout, when operators are competing not simply for existing broadband customers but for households making the transition from older copper-based connections.
“For these reasons, we consider the offer would be unfair and could harm sustainable competition, which is essential for low prices and better services in the long run, as well as helping to power the UK’s growth and productivity.”
The decision underscores the delicate balance facing Ofcom as Britain attempts to accelerate the transition to full-fibre broadband while maintaining incentives for competing networks to continue investing in infrastructure.
Openreach, BT’s infrastructure division, has been at the centre of that rollout and has faced increasing competition from alternative network operators that have built their own fibre systems in areas traditionally dominated by BT.
For consumers, the dispute is ultimately about how the benefits of that investment are divided between lower prices in the short term and maintaining a competitive market capable of supporting infrastructure spending over the longer term.
Ofcom stressed that its intervention was limited to the disputed offer and said it was not blocking other commercial arrangements Openreach plans to introduce, provided they involved smaller discounts.
James Lowther, Openreach’s commercial managing director, defended the proposal and said the company had intended to give consumers and internet service providers greater value.
“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.”
The row illustrates the increasingly difficult economics of Britain’s broadband market. Network operators need to attract customers to justify the cost of fibre deployment, while regulators are concerned that aggressive discounts by larger established networks could make it harder for smaller rivals to achieve the scale required to compete.
With roughly half of households that can already access full-fibre services yet to take them up, the battle for new customers is likely to intensify.
Ofcom’s decision signals that the regulator will scrutinise commercial incentives closely where they could alter the competitive balance between Britain’s fibre networks — particularly as the industry enters a critical phase of the transition to nationwide full-fibre connectivity.
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