Openreach Preps More FTTP Broadband Price Cuts for UK ISPs UPDATE
Good news for consumers. Openreach appears set to launch another round of wholesale prices cuts for UK ISPs that sell their gigabit-capable Fibre-to-the-Premises (FTTP) broadband lines. Dubbed ‘Equinox 2‘ after last year’s discount, the move will help the operator to stay competitive. But some rivals may raise competition concerns.
The original ‘Equinox‘ discount effectively reduced the monthly price of Openreach’s various FTTP tiers and encouraged their ISPs to upsell faster tiers in return for better rebates (details), while also giving those same providers long-term pricing certainty – lasting for 10 years. The move helped the operator and its supporting providers to stay competitive with some increasingly cheap alternative networks (AltNets).
However, the discount also generated an angry response from AltNets, including Virgin Media, Cityfibre and many others (Summary of UK Full Fibre Builds). Such operators are collectively investing billions of pounds to deploy rival fibre networks and some will build in the same areas as Openreach, or be overbuilt by them in the future, and sell their own rival wholesale products to ISPs.
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Many of those AltNets are still in the earliest stages of their investment and so carry a lot of risk. Suffice to say, they fear that Openreach’s discounts might eventually result in a reduction in competitive fibre infrastructure investment and thus deployment. If that were to happen then, a lot further down the road, it might even make such packages more expensive and reduce choice in the market (i.e. less competition to keep prices low).
However, today’s market is already too crowded with 100+ full fibre AltNets and many of those are already overbuilding each other, as well as Openreach (i.e. a high risk environment). Put another way, a fair bit of consolidation now appears to be inevitable, regardless of what Openreach does, but an ‘Equinox 2‘ offer may well exacerbate such change.
What’s Changing in Equinox 2?
According to the FT (paywall), Equinox 2 will further reduce the price of Openreach’s various FTTP tiers, while decreasing the share of revenue per customer that goes to Openreach and cutting the amount it charges for migrating customers from copper to fibre lines. The latter was always going to happen as part of the operator’s long-term plans to mass migrate consumers to the new network, with the goal of eventually withdrawing copper lines (this will take many years to fully complete).
The expectation is that Openreach will formally notify the industry of their new offer before the end of December 2022, at which point Ofcom and other providers will have 90 days to consult on the changes before they’re formally introduced to the market. Cityfibre has previously indicated to ISPreview.co.uk that, were an Equinox 2 to appear, then they might launch a more direct legal challenge against the promotion itself.
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A Spokesperson for Openreach told ISPreview.co.uk:
“We’re in constant discussion with retail providers about potential offers and options. Following on from our Equinox 1 offer – which has been really well received and driven record levels of demand for Full Fibre – Communications Providers naturally approach us to talk about what’s next.
They want longer term certainty and we all want consumers and businesses to migrate even more quickly off copper based products onto ultrafast, ultra-reliable Full Fibre. So it’s true we’re in discussions to sharpen our FTTP pricing and drive faster migrations, and we continue to talk about a range of options with them.”
However, it’s also still possible that Ofcom’s review of a future Equinox 2 offer may produce a different outcome than it did with Equinox 1, although much will depend upon the detail of the new discounts. But the regulator has previously highlighted how their analytical framework is ultimately more “concerned with the promotion of competition rather than the protection of competition as under competition law.”
Openreach are clearly aware of this and understand that they do have some flexibility to be competitive on price, which isn’t too surprising given how they now exist in a much more aggressively competitive market than before, particularly in urban areas. In the past, they’ve tended to be more expensive than competitors, which may have generated a false sense of security among AltNets that Ofcom’s prior approval of Equinox 1 probably removed.
As consumers, we look forward to seeing FTTP get cheaper, which can only serve to help boost take-up and hasten the welcome demise of copper, at least for Openreach. However, it will be interesting to see whether or where Ofcom might draw the line, as Openreach continues to test the regulatory limits of their position. But we suspect the regulator will not be overly strict.
UPDATE 31st Oct 2022 @ 9:05am
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Openreach has given us their comment on this, which we’ve added above.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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so when will i be paying less for my fibre connection from openreach 😕
Prices of fttp have dropped significantly. I now pay 29 a month for 150. Use to be around 40 was the going price before equinox.
@Darren, I remember when I was paying £40 a month for 512Kb/s ADSL, that was over 21 years ago, that is scary. But going from dial up to ADSL was amazing, and at that time I had a second person living here to help with the bills.
The one problem now is the CPI Plus 3.9% increase every year, I know prices rise, but with inflation the way it is now, that is a fair bit to put onto people’s bills, certainly with more providers sticking people onto 24 month contracts, bad enough with 18.
I kind of agree with Altnets, after all Bloated Toad paid pittance for the original network, so they had all those years making lots of money, certainly BT retail where their prices are higher than most of the others. So now bloated Toad is trying to undercut smaller network providers. Reminds me so much of sky and what they did to start-ups in the TV entertainment market years ago.
Bloated Toad have had the monopoly for too long
I am going to look at 12 months contracts when my plusnet contract ends, give me a bit more flexibility, the only problem with that is price, but we will see
Ad47uk – what monopoly?
Jordan: you’ll be paying less if/when your ISP pass on the price cut. Openreach could be providing FTTP for free but if your ISP takes all that as profit that’s how it is.
AD47: This story about Openreach price cuts is nothing to do with any RPI+3.9% price increases ISPs may be running with. It’s nothing to do with BT Retail’s pricing either.
You comment that BT Retail are more expensive than most on a story about wholesale pricing then comment on them trying to undercut smaller providers. Your post is incoherent: you’re using BT Retail and Openreach interchangeably which they are not. BT Retail can’t even buy the wholesale broadband product directly from Openreach so cannot compete with Sky and TalkTalk, among others, on price on a member of their own group’s infrastructure.
On Sky undercutting I don’t remember that. They bet the house on Premier League rights and, many of the British being football obsessed, the nation opened its’ wallets and said ‘take my money’. BSkyB became regulated and about the only undercutting I can think of was that purchasing their content through a third party was generally more expensive which isn’t surprising: there’s a middle-man there.
‘Bloated Toad have had the monopoly for too long’
Monopoly on what? They’ve never had the monopoly on retail broadband services. They have wholesale competition covering nearly everyone in the country. The majority of the country has competing infrastructure. Everywhere there’s Openreach infrastructure others can rent use of the ducts and poles.
BT Group have Significant Market Power. This a quite different thing from a monopoly.
I really don’t understand why you’ve so much animosity to various companies. BT Group here, TalkTalk you were popping up basically every time they were mentioned to let everyone know you’d never use them.
Feels like your main reason to not want FTTP is that it’s not available to the Grinch’s cave.
@The Facts
I did say had.
@XGS Is On
You seem to know who I am, not that I care.
I know the price cuts have nothing to do with RPI+3.9%, I am just saying that prices will go up a lot higher because of inflation, also will providers pass the cuts that Openreach makes to users?
I know full well the difference between BT retail, BT wholesale and openreach and I know that BT retail have to buy the service from BT wholesale and the fact that taking the BT name off overreach, don’t stop it still being owned by BT, and still the same company, no matter how BT try to tell us it is separate.
BT had the monopoly for a long time, not so much these days, but they still had the network for pittance when it was privatised and for years did very little with it with copper cables falling apart. The only reason they updating now is that they have to, as competition is forcing them.
Where do you think Sky have got the name BSkyB from? From BSB, British satellite broadcasting. It was because of BSB that sky started to give away their satellite boxes, sky a company that had Murdoch millions propping it up, sky a company that did not make a profit for years and yet forced a small company into liquidation, that was at the time far superior to Sky. Sky then more or less grabbed hold of BSB, just to get rid of the competition.
Bt would do the same if they were allowed.
I used BT years ago, I was one of the first people around here to go onto their ADSL service, I even had their mobile phone service years ago with a HTC s710, I think they called it BT everywhere or something like that, still have the phone.
I would love the openreach network to be separated completely from BT,but that is not going to happen.
I don’t think I have ever said I don’t want FTTP, I have said I feel I need it, which is a difference. If I moved into a house that had FFTP and I could get it at a decent price, then I would use it.
BSB did not go into liquidation. 50:50 merger with Sky both facing mounting debts and competition being the end of both of them if they didn’t consolidate.
Which is why the merged company’s name was a merger of both.
Your recollection of BSB being destroyed by the endlessly Murdoch bankrolled Sky is wrong. Both were pretty unhealthy which was why the merger was between equals.
Given that was your example of what BT would do I will wait and see if BT and VMO2 do a 50:50 merger as Sky and BSB.
@XGS Is On, Ok, so they merged, but Sky still pushed BSB to the verge of bankruptcy, so they had not choice but to merge. but then it was a take-over, not a merge. I love it when these large companies say that they have merged, total bull in most cases. sky had Murdoch and his millions to keep it going, BSB did not, a shame really as I would have loved to have seen how BSB went on, far better system and no mushrooms sticking out of the buildings, the Squarial was a neat little design.
I never said BT was going to merge with anyone, but they have taken over companies, EE and Plusnet, and now they are thinking of getting rid of Plusnet. I am taking Sky as an example of how big companies operate, sadly, including the one I work for.
It is good that BT have some competition in the network side and I am also glad that Ofcom forced them to allow other network providers to use their ducts and poles.
Wrong there too. Had Sky had all that money why would Uncle Rupert accept a 50:50 merger?
Sky needed the merger as much as BSB did. Both were in financial trouble. Sky couldn’t count on Newscorp for funding.
As I’m sure you’re aware BSB had their own pair of satellites with all the expense that entailed. The Sky method of leasing capacity from Astra SES was chosen because it was cheaper in the short and medium term even if it meant larger dishes.
BSB was a higher quality product that went way over budget and spent hundreds of millions before signing up a single customer. Sky was lower quality, spent less, and still had to merge to sustain itself.
BSB launched in March of 1990, over a year after Sky, and the merger was announced in November of that same year.
Your recollection of what happened there has no evidence supporting it.
I don’t ‘know’ you but I read your posts on TBB.
@XGS Is On
Fair enough, it was a long time ago, over 30 years ago, but looking at some info now, BSB did not last long by the seems of it.
I do hate this take over of companies, where I work, they did the same thing a few years ago, in fact they took over two companies, one makes my job harder, the other makes no difference to me. A lot of these take-overs are assets stripping and with Sky, it was getting rid of the competition. How times have changed, now people have more choice than ever apart from sport where sky still has the monopoly on that. Makes no odds to me, the only sport thing I watch is formula 1,2 and 3.
I have recently been to Spain where Vodafone charge €26 a month (£22.50) for a 600 Mbps service. I realise the cost of deployment in Spain is lower, owing to cheaper wages and more apartment blocks, but it helps explain why full fibre take up is so high.
It’s not much worse here I just had city fibre installed and vodaphone are offering me 1g/1g for £32 a month for 12 months then rising to £35
Part of the lower costs is the lower quality. In Spain speeds are ‘up to’ and can and do vary. Here people threaten to go to the King at the slightest blip below advertised performance.
Vodafone are an altnet in Spain. In the UK you could sign up to an altnet that’ll give you symmetrical gigabit for £25 a month as a special offer.
Taking into account purchasing power I imagine that’s very close to the Vodafone ES price for a higher capacity, higher quality product.
This isn’t a surprise, Jansen telegraphed as much last year, and economies of scale will always allow the bigger player to offer a cheaper service. As long as the wholesale prices aren’t offered below cost, are universal, and not subsidised by other revenue streams, I’m not sure there’s anything the competition authorities could act on. If Openreach lowered prices to be more competitive, and offer a cheaper product, it isn’t anticompetitive as long as competition law is adhered to.
Openreach are a regulated business. Ofcom decide the acceptability of their pricing in the first instance not the regular private sector Competition Authority.
Ofcom can keep the pricing artificially high if they so choose. The test is usually whether a reasonably efficient competitor may undercut the pricing.
It’s that way precisely because Openreach have economies of scale no-one else does and without regulation could quickly snuff out competition. Makes PIA pretty pointless, especially when Openreach don’t use it themselves so no-one could match their efficiency, doesn’t it?
I’m not so sure OFCOM are interested in regulating Openreach to protect Altnets. OFCOM could just as easily promote competition by shaping Openreach into an entity similar to National Grid in the power industry. I’m also not so sure whether OFCOM could force Openreach to maintain uncompetitive pricing, as long as Openreach treat all their wholesale customers equally on pricing.
Much of the investment in Altnets will disappear up the chimney in my opinion, as many of them will fail to reach scale and are possibly geographically disadvantaged from a takeover perspective.
An argument, I’ve seen contradicting my opinion, is that smart money wouldn’t invest in Altnets unless they’re confident of a return on their investment, but I’ve seen examples of smart money getting it wrong; Look at the Softbank investment in WeWork, apparently facing losses over $20 Billion. Wework is promoted as a Tech company, but I couldn’t see much differentiating it from companies like IWG (Regus) and Regus have been doing business for decades, offering office rental space, so smart money isn’t always that smart.
When there is OR and 3 altnets in an area at least one will end up with less than 25%.
I have recently been to Spain where Vodafone charge €26 a month (£22.50) for a 600 Mbps service. I realise the cost of deployment in Spain is lower, owing to cheaper wages and more apartment blocks, but it helps explain why full fibre take up is so high. It’s going to be a bloodbath when the various investors decide that they’ve had enough and withdraw.
I was wondering if a more regional approach could be used where alt nets get some form of exclusivity discount period in overbuild areas 1-2 years after which openreach discount could be applied. This could encourage people off of the network but at the same time doesn’t completely eradicate the competitiveness of openreach based retailers. If the exclusivity period starts at the start of the network build it may also encourage quicker altnet rollout to maximise exclusivity time. Perhaps this is already being done I don’t have much knowledge here.
The annoying thing for me is that each provider in our area requires a different csp, a different hole to be drilled and a different ONT. I understand there are technical requirements for each provider but couldn’t there be some reuse I.e usage of the same csp.
Many altnets are well funded commercial business that pick and choose where they build. Why would they need a discount and how would that work?
I more meant have time before BT are able to apply discounts to their services to allow take up of altnets but still keep BT competitive after this duration.
That would be a pretty difficult thing to implement.
My area is just starting the exchange wide FTTP rollout but many areas on the exchange have had FTTP for years from BDUK and RNS work, including myself.
Should some customers be forced to pay higher prices and being blocked from discounts like the Equinox 2 offer for a lot longer than 2 years because the rest of the exchange doesn’t have FTTP?
Does the 2 years start for each property from the day they can receive FTTP?
Do the Alt-Nets have to meet any specific coverage requirements for this “exclusivity” period to apply?
I’m not a fan of blocking customers from receiving discounts to give preferential treatment to Alt-Nets who can simply cherry pick what properties they roll out to.
Some people will be blocked from receiving discounts when no Alt-Net will have any intention of rolling out to them anyway.
Most Alt-Nets are funded by massive investment banks or venture capitalists who need no assistance recouping their investments.
My take… Too many networks trying to roll out in the same areas. Too many networks with business plans doomed from the start.
Averaging £1-2k+ per property passed and achieving take up rates in single figures shouldn’t be subsidized by the general publicly being blocked from reduced prices.
I agree, I was just wondering if there was another way to harness competition between alt nets and BT, virgin etc on a fair playing field either way. I just moved to an altnet because they were offering the same + symmetric speed for £30 p/m less than BT which they couldn’t compete with. It will be interesting to see what happens if there is consolidation over the next few years
Altnets will need to use their smaller size to be more agile and offer more bespoke services – such as doing more complex installations in terms of pulling fibre under floors where customers want the neater finish, home LAN wiring, a more reasonable approach than OR to a “fibre on demand” service where premises are close to their existing network, offering to carry multiple services over a broadband connection by letting customers with multiple sites establish L2 services between them etc.
If an altnet tries to compete by costing more than Openreach, only having asymmetric services, provide an IPv4-only connection behind CGNAT, don’t permit customers to use their own routers etc. then they deserve to have very low take-up figures.
A key reason why the Altnets kicked up a fuss with Equinox 1 wasn’t the price discounts – they are big enough and ugly enough to compete on price with anyone, including OR. More important were the lengthy lock-in periods that were part and parcel of the offer, and which most if not all commentators failed to grasp. Retailers could only benefit from the discounts if they committed to only using OR as their wholesale provider for years to come, effectively stopping alternative providers from getting a look-in at any price.
I guess this explains why BT group remains defiant in the midst of strikes over pay, they need to position themselves to squeeze all the players out of the market to emerge the victor, even if that means they squeeze their own staff in the process.
Perhaps once BT group has reached their target of eliminating most of the competition they will bring about payrises for everyone, after all the consumer price increases that would follow.
Wait until next April 2023 CPI Plus 10.1%
Yes, I had a listen to Money box on Radio 4 yesterday, and they were saying about price of broadband, with it being more or less required these days for living, providers should think when they are increasing prices.
This is why I am thinking of going for a 12-month contract, the problem is can I find one at a decent price. i did see now TV has 12 months, but this is sky at the end of the day, not sure if I want anything to do with Sky again, not that i have had a problem with them myself, apart from them trying to push a sky+ box onto me when I tried to cancel years ago, after telling them Sky was full of repeats and that is why I wanted to cancel. 🙂
I have a bit of time yet, but at some point I need to look at my options. Maybe I should look at 4G instead of fixed line broadband.
So the AltNet supporters are saying that those of us who live in Openreach FTTP areas with no chance of an AltNet are saying that I should pay more to keep Altnets I cannot use happy?
Balancing act. No altnets we all pay more.
When it comes to FTTP OR doesn’t really have a monopoly. It’s new infrastructure and the ducts can be used by alt nets.
I’ve just cancelled my Trooli install as they still couldn’t provide myself an eta and were effectively uncontactable via phone (was supposed to be installed in Sept).
OR fixed a DB error and I’m having a Fiber900 connection installed from BT on the 17th for £55pm.
Pricing didn’t make me change suppliers, competitence did.
I don’t really recall much of a reduction in price after ‘Equinox 1’? I still think the base FTTP product should be no more than £25 for a 150Mbps service – this will encourage uptake over FTTC products.
A little dismayed at the altnets planning on taking this to court.
Altnets are largely not interested in rural coverage. Don’t get me wrong I’m no huge fan of Openreach and how long it has taken them to do their jobs but they are the only people who will ever be even pretending to be interested in providing fibre internet to genuinely rural areas.
Altnets will always overlook these places as it just isn’t worth it for them. It is galling to know how much more you pay for fibre outside of towns and cities though, any effort to get the price down is appreciated by us who will only ever be served by Openreach. Cityfibre’s concerns are not my concerns, they are already in a good position to compete and undercut OR in urban areas.