{"id":33115,"date":"2022-12-06T13:58:13","date_gmt":"2022-12-06T13:58:13","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=33115"},"modified":"2022-12-07T11:08:28","modified_gmt":"2022-12-07T11:08:28","slug":"cityfibre-files-uk-full-fibre-competition-complaint-against-openreach","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/12\/cityfibre-files-uk-full-fibre-competition-complaint-against-openreach.html","title":{"rendered":"Cityfibre Files UK Full Fibre Competition Complaint Against Openreach UPDATE2"},"content":{"rendered":"

Network builder Cityfibre<\/a> has today announced that they’ve formally submitted a Competition Act complaint to the Competition and Markets Authority (CMA) and Ofcom<\/a> against Openreach<\/a> (BT<\/a>), which accuses the operator of “undertaking an aggressive strategy to foreclose infrastructure competition in the UK fibre broadband market<\/em>“.<\/p>\n

At present Cityfibre<\/a> is investing an estimated \u00a32.4bn in equity and \u00a34.9bn debt to reach up to 8 million premises – across more than 285 cities, towns and villages (c.30% of the UK) – with their new gigabit-capable Fibre-to-the-Premises<\/strong> (FTTP<\/a>) broadband ISP network by the end of 2025 (here<\/a>). The network has already covered 2 million UK premises and is continuing to grow.<\/p>\n

Similarly, Openreach<\/a> are investing up to \u00a315bn to cover 25 million premises with FTTP<\/a> by December 2026 (80%+ of the UK) and they\u2019ve already completed 9 million premises. Both Cityfibre<\/a> and Openreach<\/a> are direct competitors and increasingly overbuild each other in the aggressively competitive urban areas where they both, at this stage of the build, tend to focus most of their energy.<\/p>\n

However, Cityfibre has previously made no secret of their frustration with Openreach’s approach to major price cuts (“Equinox<\/em>“) on their wholesale FTTP<\/a> products (here<\/a>), which they and other alternative networks (AltNets) tend to view quite negatively (here<\/a>) – this is seen by them as the dominant player using its market power to put the squeeze on smaller rivals.<\/p>\n

Such AltNets, which carry a lot of risk due to still being in the earliest stages of investment and competitive infrastructure build, have previously enjoyed a market where Openreach was traditionally much more expensive. This made it easier for Cityfibre to grow take-up, attract investment and gain support from third-party ISPs to their equivalent wholesale options.<\/p>\n

Despite this, Ofcom<\/a> has so far taken the view that Openreach’s price discounts were “not anti-competitive<\/em>” and there’s an expectation that the regulator may take a similar view in the future. This is relevant because we’re expecting Openreach to unveil another round of price discounts (“Equinox 2<\/em>“) in the very near future.<\/p>\n

Cityfibre’s New Complaint<\/strong><\/span><\/h3>\n

Unlike last year’s complaint by Cityfibre to the Competition Appeal Tribunal<\/a> (CAT), which tried and somewhat failed to poke holes in Ofcom<\/a>’s review process for the first “Equinox<\/em>” discount scheme (here<\/a>). The new complaint to the CMA is a much more significant challenge.<\/p>\n

The complaint claims to detail how Openreach is “undertaking an aggressive strategy to foreclose infrastructure competition in the UK fibre broadband market<\/em>“, which they view as a strategy that “exploits the dependency of its wholesale internet service provider customers (ISPs), deterring them from placing orders with alternative fibre providers, even though these providers offer faster, more reliable, and cheaper wholesale services<\/em>.”<\/p>\n

The Competition Act 1998<\/strong> was designed to prevent abusive monopolistic behaviour, and Cityfibre believe Openreach’s strategy “risks causing irreversible harm to network competition<\/em>” in the UK.<\/p>\n

Greg Mesch, CityFibre CEO, said:<\/strong><\/p>\n

“We welcome fair competition, but BT<\/a> Openreach\u2019s behaviour is straight out of the playbook of a dominant operator using its market power and advantages to maintain its dominance.<\/p>\n

If left unchecked, BT<\/a> Openreach will strangle competition and threaten the pace of the UK\u2019s full fibre roll out \u2013 all at the same time as BT Consumer is imposing broadband price rises on millions of households far above the rate of inflation.<\/p>\n

Were this to happen, it would also send a clear signal to investors that this country is not a place where they can safely invest the billions of pounds needed to improve UK infrastructure.”<\/p><\/blockquote>\n

The complaint appears to be somewhat of a pre-emptive strike against Openreach’s plans to introduce even bigger discounts on their FTTP products in the near future, which could potentially delay the related announcement(s). But whether or not it will be successful is another matter, since this may well go to the very heart of how a competitive market is supposed to function, particularly in urban areas (it’s hard to say for sure as Cityfibre has not provided much detail on the complaint itself).<\/p>\n

NOTE:<\/strong> Not all AltNets offer viable wholesale access like Cityfibre and quite a few are more vertically integrated (third-party ISPs cannot join).<\/div>\n

The flip side of this is that ISPs on Openreach’s network often feel as if they’re being left at a competitive disadvantage versus significantly cheaper AltNets. Such providers have thus put pressure on Openreach to adapt and stay competitive, hence the discounts, which in-turn also helps to boost take-up by consumers and aid the move away from older copper lines. Consumers are generally pleased to see fibre prices fall, especially in this climate.<\/p>\n

An Ofcom spokesperson said:<\/strong><\/p>\n

“We can confirm we have received CityFibre\u2019s complaint.”<\/p><\/blockquote>\n

Clive Selley, CEO of Openreach, said:<\/strong><\/p>\n

“We\u2019ve not seen the detail of this complaint yet, but we reject any suggestions that Openreach isn\u2019t competing fairly and we\u2019ll defend that position strongly. We take our legal and regulatory obligations extremely seriously and we\u2019re confident that we comply with those obligations to enable fair competition and choice for UK consumers and businesses.<\/p>\n

Meanwhile we\u2019re building further and faster than any company we\u2019re aware of in Europe, so suggestions of a threat to the pace of the UK\u2019s roll out are very wide of the mark. We\u2019re also in constant discussions with service providers \u2013 often at their request \u2013 about our pricing and ways to accelerate the adoption of full fibre broadband, so we\u2019ll continue to work closely with them to support and upgrade their customers.”<\/p><\/blockquote>\n

The challenge is with figuring out where to draw the line on all this to balance the vested interest of both sides. Ofcom has allowed Openreach plenty of flexibility to stay competitive, as seems only fair in such an aggressively competitive market – this is part of the reason why the dominant player opted to invest so much money into a major FTTP build in the first place. But did the regulator allow too much flexibility? The CMA will have to decide.<\/p>\n

UPDATE 4:16pm<\/strong><\/p>\n

We’ve added a comment from Ofcom and Openreach above.<\/p>\n

UPDATE 7th Dec 2022 @ 11:06am<\/strong><\/p>\n

We’ve had a comment from INCA, which represents UK AltNets.<\/p>\n

Malcolm Corbett, CEO of INCA, told ISPreview.co.uk:<\/strong><\/p>\n

“No one should be surprised by the announcement today that CityFibre have submitted a Competition Act complaint to the Competition and Markets Authority (CMA) and Ofcom against BT Openreach. The UK\u2019s independent broadband providers are united in their concerns at the way the current monopoly provider is behaving and the threat it poses to consumers.<\/p>\n

It is complete myth to suggest that consumers will receive a better service and lower prices if there is only one dominant player in the market. The quickest way to ensure networks are built and the best way for broadband bills to stay low is to ensure there is a healthy competitive market. Despite the price reductions Openreach have made previously (and are trying to do again) to their wholesale customers, prices to consumers have been going up above inflation and increasing far faster than those of the so-called \u2018alt-nets\u2019.<\/p>\n

INCA continues to remind the regulator and the Government of their commitments to ensuring there is a fair and competitive market in the UK and while we would rather it was not necessary, we fully support CityFibre in taking this action.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Network builder Cityfibre has today announced that they’ve formally submitted a Competition Act complaint to the Competition and Markets Authority (CMA) and Ofcom against Openreach (BT), which accuses the operator of “undertaking an aggressive strategy to foreclose infrastructure competition in the UK fibre broadband market“.<\/p>\n","protected":false},"author":1,"featured_media":25551,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1,1645],"tags":[418,56,86,36,69],"class_list":["post-33115","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","category-key_uk_isp_industry_developments","tag-cityfibre","tag-fttp","tag-law","tag-ofcom-regulation","tag-bt-openreach"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nCityfibre Files UK Full Fibre Competition Complaint Against Openreach UPDATE2 - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Network builder Cityfibre has today announced that they've formally submitted a Competition Act complaint to the Competition and Markets Authority (CMA)\" \/>\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\/2022\/12\/cityfibre-files-uk-full-fibre-competition-complaint-against-openreach.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cityfibre Files UK Full Fibre Competition Complaint Against Openreach UPDATE2 - 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