Vodafone UK CEO Pushes Ofcom to Clear Openreach FTTP Prices Cuts
The CEO of mobile and broadband ISP Vodafone UK, Ahmed Essam, has joined other retail internet providers in publicly calling on Ofcom to approve Openreach’s proposed “Equinox 2” discount scheme for their Fibre-to-the-Premises (FTTP) based products, which is being challenged by alternative networks (AltNets).
At the end of 2022 Openreach confirmed that it planned to introduce another round of wholesale discounts on their full fibre products from 1st April 2023 (here), which would help ISPs on the same network to stay competitive with newer and often cheaper AltNets (Summary of UK Full Fibre Builds). Lower prices could also boost take-up by consumers and thus aid the move away from copper lines.
However, more than a few rival networks viewed the move as being anti-competitive (here), with CityFibre even lodging a Competition Act complaint with the Competition and Markets Authority (CMA) and Ofcom (here). The regulator then provisionally ruled in February 2023 that Equinox 2 was “not anti-competitive” (here), but in March they opted to impose a two-month delay on its implementation after identifying “issues which require further assessment“.
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Openreach’s proposal is widely desired by ISPs on their network and some, such as Zen Internet (they use both CityFibre and Openreach’s services), have already argued in favour of the discount scheme being allowed to proceed (here). Now the boss of Vodafone UK, which is a provider that also harnesses full fibre services from both Openreach and CityFibre, has similarly lent his support to the incumbent.
Ahmed Essam, CEO of Vodafone UK, said:
“We think their proposed offer poses no threat to efficient alternative fibre providers and, importantly, doesn’t discourage retailers like Vodafone from using other wholesalers. Indeed, we hope to widen our use of alternative fibre providers in the near future. We strongly believe that a competitive wholesale market is essential to ensure UK consumers benefit from good value, choice and innovation.
So we hope Ofcom will recognise the value of Openreach’s Equinox II offer to consumers and its important role in encouraging wider fibre adoption.”
The confirmation that Vodafone are also planning to add other AltNets to their platform in the “near future” is arguably a much bigger development here, although it won’t really be major news until they start putting some meat on the bone by announcing solid agreements. An ISP of their size would be more likely to invest time and effort to onboard larger AltNets with an attractive wholesale solution, such as perhaps Netomnia and CommunityFibre.
However, Essam also stressed that he would like to see wholesalers introduce broadband social tariffs to help support ISPs that offer similar products to vulnerable customers, which may be a bone of contention for Openreach and others that have ruled out such a product (example). But to be fair, Openreach do already offer some solutions that complement social tariffs, such as a regulated FTTC tier and connection discounts for those on state benefits.
Ahmed Essam added:
“As a purpose-led business, we also want to offer broadband packages that are affordable for our most vulnerable customers. This is why we launched our social broadband tariff in October 2022 – the cheapest on the market at the time. At just £12 a month it represents fantastic value for money.
Unfortunately, it is unsustainable at that price. Even though our costs having been rising sharply due to rampant inflation – our energy bills in particular have spiralled – we’ve kept our social tariff at £12 a month. But the wholesale element of that social broadband bill accounts for more than the entire retail price!
So if we’re going to continue offering affordable – financially viable – social tariffs to digitally excluded people – as we, Government and Ofcom want – we need Openreach, CityFibre and others to offer an equivalent wholesale social tariff at a substantially reduced rate. We’re hoping Ofcom will support us in this ask.”
Naturally, everybody is currently playing to their own vested interests. Retails ISPs will always welcome cheaper wholesale prices, while AltNets will welcome measures that help to protect their investment against much larger and more well-established incumbents, such as Openreach. Similarly, consumers will welcome anything that makes their broadband cheaper, or which at least inhibits them from getting dramatically more expensive.
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In the middle of all this, Ofcom has the difficult task of trying to find some balance between the often-bitter industry divisions, although so far, they’ve shown little desire to push for social tariffs at the wholesale level. As for their stance on Equinox 2, we suspect that they may still approve the proposal, albeit possibly with some caveats that may or may not cause problems if Openreach try to push an Equinox 3 or 4 further down the road.
Either way, we expect to learn the outcome soon, unless the regulator delays their decision again.
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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Here for the comments…
Agree. Vodafone need the cash to upgrade their fixed network.
Wonder if they still have kit that belonged to Bulldog? Last year at least they still had areas they couldn’t sell gigabit in as the exchange kit was the stuff they purchased from Cable and Wireless who in turn acquired it when they bought Bulldog.
Vodafone commit to passing the Equinox discounts to customers in full then they can have the moral high ground.
Fully agreed … But bet little of any discount finds its way through
Any of these open reach style big boys are free to open the pavement and start their own network 😉
At the moment all I see is alt nets building already crowded market areas, appreciate that may not be fact and could be opinion
Given how absolutely stupid of a system CityFibre have to change ISPs and even just change speeds on your current ISP. All my goodwill towards them is going. So I say cheaper Openreach, great, might force CityFibre to stop being so stupid with its processes.
I doubt its stupidity, more a maturity. Large networks are hard. Large wholesale networks are hard.
Once you get processes and procedures in place, it’s much easier. Large expansion on an immature network (especially one which is segregated by area not a national go-live for your customers) is always going to be clunky.
Just hopefully VM don’t buy them and screw up what they have.
lets just hope the isp’s that use OR network pass on the savings to their customers
To the share holders, never to the customers Aw.
buggerlugz
openreach customer are communication providers (So in this case Vodafone are the one of the customers)
missing the point again as ever
@Fastman: “openreach customer are communication providers (So in this case Vodafone are the one of the customers)”
That’s only half the story. Openreach is not a genuinely independent company, and doesn’t even own the network assets. And end users do have dealings with Openreach, such as when Openreach installs or fixes lines on behalf of ISPs. And the fact is Openreach hasn’t yet improved much, see e.g. https://uk.trustpilot.com/review/www.openreach.co.uk
semantics Gnewton — but typical response so not surprised
they only have dealings once an appointment is confirmed via the Service Provider as you well know
disinformation and mis information as ever
@lugz
And yet Britain remains one of the most affordable countries in the world for broadband. If you haven’t seen the perpetually reducing price for broadband you’ve not been paying attention.
Oh no, Greg Mesch is going to start crying again.
As someone already said…
Like Cityfibre climbing into the ring to take on Mike Tyson, puffing out they’re chest and shouting about they’re going to do to him, then when they realise it’s more difficult than they first thought, start crying and ask Ofcom to tie one hand behind his back.
If you can’t take the heat… Get out of the kitchen.
Cityfibre are already cheaper than Openreach Equiniox 2. Not sure what your point is…
@Anon. So why does Mr Mesch/Cityfibre object to Openreach’s Equinox 2? So much so that they even lodged a complaint with CMA and Ofcom?!
The other incentives/tie-ins. There’s more in Equinox 2 than the relatively minimal headline price cuts.
What’s stopping Cityfibre coming up with their own set of incentives to attract customers?
Nothing, the problem is that operators are already customers of Openreach and CityFibre’s objections are at least partially due to Equinox using that advantage to retain CPs. That’s CityFibre’s objection, not pricing.
Cityfibre are already cheaper than Openreach Equiniox 2. Not sure what your point is…
Why is Greg always crying about this potential price cut by Openreach?
@Oggy Because Greg’s/Cityfibre’s business plan isn’t working and if competitors cut their prices then it makes things even worse.
That’s on top of poor take up percentages, rising overheads, rising interest rates and impatient investors breathing down their neck.
Not a pleasant situation to be in.
Absolutely Mohammed.
Greg is all about low prices for those that use his network but not low prices for those that’ll use a competing network. It’s almost anti competitive.
The altnet romanticism from some is hilarious. These are, in the main, companies being funded by massive venture capitalists and the like yet people fawn over them like they are a mom and pop.
Not to mention the people who love to profess that alt nets are the ones who are really connecting Britain. Not Openreach, even though many alt nets use PIA and Openreach’s own FTTP footprint makes everyone else look like a joke.
Altnets have certainly served their place in forcing OR to stop faffing with copper, but it’s hard to see what value they offer long-term (except when they become Virgin Media’s off-net fibre division, of course…)