{"id":24445,"date":"2020-10-19T08:56:11","date_gmt":"2020-10-19T07:56:11","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=24445"},"modified":"2020-10-19T10:09:28","modified_gmt":"2020-10-19T09:09:28","slug":"virgin-media-uk-warns-bt-against-anti-competitive-fttp-discounting","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2020\/10\/virgin-media-uk-warns-bt-against-anti-competitive-fttp-discounting.html","title":{"rendered":"Virgin Media UK Warns BT Against Anti-Competitive FTTP Discounting"},"content":{"rendered":"

Broadband ISP Virgin Media<\/a> UK has warned the market regulator, Ofcom<\/a>, against allowing BT<\/a> (Openreach<\/a>) to sign “deeply discounted and long-term<\/em>” wholesale agreements for “full fibre<\/em>” (FTTP<\/a>) services with rivals ISPs, which they claim might make it harder for alternative networks to compete against the established giant.<\/p>\n

The latest remarks stem from the cable operator’s submission to Ofcom<\/a>’s on-going Wholesale Fixed Telecoms Market Review 2021-26<\/a><\/strong> (WFTMR), which has only recently been published in public after being privately submitted to the consultation several months ago. As you might expect all of the new submissions are playing to each company’s vested interests.<\/p>\n

NOTE:<\/strong> BT<\/a> plan to invest \u00a312bn to help Openreach<\/a> rollout FTTP<\/a> to 20 million UK premises by the mid to late 2020s (here<\/a>). Virgin Media<\/a> is also talking about adding 8 million more UK homes (here<\/a>).<\/div>\n

For example, last week saw budget ISP TalkTalk<\/a> criticise Openreach for their alleged failure to sign long-term discount deals (wholesale), which they say would help boost take-up of their gigabit speed Fibre-to-the-Premises<\/strong> network (here<\/a>). On the flip side TT is concerned about the removal of regulation from Openreach’s older copper lines (here<\/a>), which could result in more expensive legacy services (i.e. pushing people on to fibre).<\/p>\n

In response, Openreach reminded TT that they had a “legal obligation to treat all of our customers equally<\/em>” (i.e. being too generous on FTTP pricing could breach UK competition rules). Fast forward to today and we now have Virgin Media arguing an opposing position to the one being put forward by TT, which reflects their wider interests.<\/p>\n

Suffice to say that Virgin’s angle here is different because they’ve both built their own closed network infrastructure and run their own ISP on top. At the same time the operator currently appears to be considering the launch of a new wholesale division and a major network expansion that could rival Openreach, which means that whatever is good for Openreach might potentially end up being bad for Virgin. Cityfibre<\/a> share a similar position.<\/p>\n

Virgin Media’s Statement to Ofcom<\/strong><\/p>\n

Wholesale partners are critical for both challengers and Openreach, but these desires are unlikely to be complementary. We suspect most altnets will prioritise relatively dense areas with attractive CPPs as well as areas where Openreach\u2019s existing network performance is below its national average i.e., where FTTC<\/a> technology is struggling to cope with customer demand.<\/p>\n

These factors are likely to be important considerations for Openreach\u2019s own prioritisation, alongside targeting areas of Virgin Media coverage to improve competitiveness. As a result, rather than complementing one and other, altnet build locations and Openreach fibre rollout are likely to materially overlap and so directly compete. In these scenarios volume- and term-based discounts can have the effect of foreclosing competition.<\/p>\n

If a larger retailer negotiates a deeply discounted and long-term deal it is unlikely to focus on committing to a partnership with an alternative infrastructure provider if such a deal should jeopardise the discounts received from Openreach. If Openreach were successful in securing the large majority of its wholesale customer base on long-term arrangements, it is difficult to see how competition from altnets would not be adversely impacted.<\/p><\/blockquote>\n

Openreach have already moved to facilitate their ISP clients by offering special FTTP discounts, which has enabled providers to benefit from price reductions when they help to drive take-up (example<\/a>). Earlier this year we also reported that the operator was exploring a potentially even bigger discount scheme by the end of this year (here<\/a>), but that has yet to materialise and there’s clearly a hot debate over this side of things.<\/p>\n

Suffice to say that Ofcom’s job in all this is to try and find some balance between the many opposing views, which enables Openreach to get a return on their investment by pushing forward with FTTP, albeit without giving them so much freedom that it potentially causes harm in other parts of the market. It is not an easy task.<\/p>\n

Ofcom have said that they are “alive<\/em>” to the issues raised above and will act to “restrict<\/em>” any discounts that are too aggressive (here<\/a>), although Virgin Media complains that the regulator remains “rather opaque in how it would decide whether to act and what any remedy might be<\/em>.”<\/p>\n

An Ofcom spokesperson told ISPreview.co.uk:<\/strong><\/p>\n

“Our plans are designed to support competitive investment in faster broadband, from a number of different networks. Some forms of long-term, wholesale discounts can act as a roadblock to investment from rival companies. We\u2019ll be able to review these types of agreements and restrict them if necessary, to prevent any practices that stifle competition.”<\/p><\/blockquote>\n

An Openreach spokesperson told ISPreview.co.uk: <\/strong><\/p>\n

“We’ve been encouraged to see strong demand from our wholesale customers as we work to build the biggest and best full fibre network in the UK. Openreach exists to promote competition in the market, and we take our legal obligations very seriously, so we’re working closely with customers to develop attractive propositions which safeguard that competition.”<\/p><\/blockquote>\n

Lest we also forget that Openreach still has to balance all of this against needing to ensure that FTTP isn’t so cheap as to make it harder for them to recover their planned investment. Meanwhile cheaper FTTP packages are of course something that consumers will welcome, although in fairness most of them are already very affordable, particularly given the improvement in speed and reliability.<\/p>\n

UPDATE 9:49am<\/strong><\/p>\n

Added Openreach’s full comment above and one for Ofcom too.<\/p>\n","protected":false},"excerpt":{"rendered":"

Broadband ISP Virgin Media UK has warned the market regulator, Ofcom, against allowing BT (Openreach) to sign “deeply discounted and long-term” wholesale agreements for “full fibre” (FTTP) services with rivals ISPs, which they claim might make it harder for alternative networks to compete against the established giant.<\/p>\n","protected":false},"author":1,"featured_media":24446,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[474,56,36,69,475],"class_list":["post-24445","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-bt","tag-fttp","tag-ofcom-regulation","tag-bt-openreach","tag-virgin-media"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nVirgin Media UK Warns BT Against Anti-Competitive FTTP Discounting - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Broadband ISP Virgin Media UK has warned the market regulator, Ofcom, against allowing BT (Openreach) to sign "deeply discounted and long-term" wholesale\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2020\/10\/virgin-media-uk-warns-bt-against-anti-competitive-fttp-discounting.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Virgin Media UK Warns BT Against Anti-Competitive FTTP Discounting - 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