{"id":33982,"date":"2023-03-17T07:24:32","date_gmt":"2023-03-17T07:24:32","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=33982"},"modified":"2023-03-20T07:47:19","modified_gmt":"2023-03-20T07:47:19","slug":"ofcom-uk-delay-start-of-openreach-fttp-broadband-price-cuts","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2023\/03\/ofcom-uk-delay-start-of-openreach-fttp-broadband-price-cuts.html","title":{"rendered":"Ofcom UK Delay Start of Openreach FTTP Broadband Price Cuts UPDATE3"},"content":{"rendered":"

Ofcom<\/a> has this morning announced that they will need “an additional two months<\/em>” to undertake further analysis of Openreach<\/a>’s “Equinox 2<\/em>” discount scheme, which will delay the operator’s planned 1st April 2023 launch of cheaper wholesale prices on their Fibre-to-the-Premises (FTTP<\/a>) based broadband ISP products.<\/p>\n

In case anybody has forgotten, Openreach<\/a> were preparing to introduce another round of wholesale discounts on their FTTP<\/a> products (here<\/a>). Ofcom<\/a> had already given provisional approval for this after stating that “the offer is not anti-competitive and is consistent with the rules<\/em>” (here<\/a>). The move will help the operator’s ISPs to stay competitive with newer and often cheaper Alternative Networks (Summary of UK Full Fibre Builds<\/strong><\/a>), which could in turn boost take-up by consumers (cheaper packages) and thus aid the move away from copper lines.<\/p>\n

NOTE:<\/strong> BT<\/a> are investing up to \u00a315bn to cover 25 million premises with FTTP<\/a> by December 2026 (80%+ of the UK). So far, they\u2019ve already completed 9.6 million.<\/div>\n

The discounts themselves are not as dramatic as the original Equinox 1 offer, with smaller changes to rentals and some reductions in connection charges. Nevertheless, more than a few AltNets viewed the move as being anti-competitive (here<\/a>), with CityFibre<\/a> even going so far as to lodge a Competition Act complaint with the Competition and Markets Authority<\/strong> (CMA) and Ofcom<\/a> (here<\/a>).<\/p>\n

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

Ofcom had originally been due to complete their review of the new discount scheme – a requirement of the current rules – by the end of March 2023. But the regulator said that their consultation on all this had resulted in a number of “detailed responses<\/em>” from the wider industry, some of which are said to have “raised issues which require further assessment<\/em>.”<\/p>\n

Ofcom Statement<\/strong><\/p>\n

We had planned to publish a final decision on the consultation by the end of March 2023. We now anticipate that it will take an additional two months to undertake this further analysis and issue our final decision.<\/p>\n

The Equinox 2 offer is due to launch on 1 April 2023. To provide certainty and stability for industry, our view is that it would not be appropriate for the offer to launch until we issue our final decision.<\/p>\n

We are considering issuing a Direction to Openreach, using our powers under the Communications Act 2003, to achieve this, unless Openreach voluntarily defers the launch of the offer.<\/p><\/blockquote>\n

Separately, Ofcom also noted that a number of respondents to the consultation referred to a recent interview given by BT<\/a>’s CEO, Philip Jansen, to the Financial Times<\/a> on 2nd February 2023. This is a reference to the now somewhat infamous remarks that were made, which saw him warn that their fibre rollout was now an “unstoppable machine<\/em>” that will ultimately “end in tears<\/em>” for many of its rivals.<\/p>\n

Digging his heels in deeper, Jansen then suggested that, once all is said and done, there is “only going to be one national network<\/em>” (bad luck CityFibre<\/a> and VMO2?), before questioning “Why do you need to have multiple providers?<\/em>“. Such remarks were perhaps quite poorly timed, particularly given Ofcom’s review of Equinox 2. The regulator has been trying to grow competition and is alive to the perception that it may be giving Openreach too much of an easy ride.<\/p>\n

In the interests of transparency, the regulator has now published an exchange of letters<\/a> between Mr Jansen and Ofcom by way of a follow-up to that article. The letters see Ofcom warn that Jansen’s remarks “caused us <\/span>significant concern<\/span><\/span><\/em>“, before reminding BT<\/a> of its current review, future monitoring report and BT’s own commitment to “fair<\/span> competition<\/span><\/span><\/em>“.<\/p>\n

In his reply, Jansen apologised and said that “some of my comments [had] been taken out of context<\/em>” in the FT article, before giving examples. But we’ll leave it up to our readers to judge how out of context they were.<\/p>\n

Examples of Jansen’s “out of context” Remarks<\/strong><\/span><\/p>\n

\u2022 \u201cThere is only going to be one national network\u201d was part of a broader discussion about the truly national ambition Openreach has \u2013 both urban and rural \u2013 and the progress they\u2019re making towards that. It was not in any way a comment about other builders.<\/p>\n

\u2022 \u201cWhy do you need multiple providers?\u201d, was preceded with (but not reported): \u201cIf you are a CP, you would probably prefer one wholesaler with one technical solution, if they can give you the geographic coverage you want…\u201d It was therefore about potential CP preference, not the broader market.<\/p>\n

\u2022 \u201cNo one else has got a machine anywhere near ours. It\u2019s . . . unstoppable.\u201d This was in answer to a question on the scale of ambition and my confidence in Openreach\u2019s ability to deliver a truly nationwide network.<\/p>\n

\u2022 When asked about the likely future shape of the market, I said I believed there would probably be two players with major footprints \u2013 BT Group and VM-O2<\/a> \u2013 and then a number of alt nets who have built strong businesses. I then gave the example of [redacted] which has five builders, to say that inevitably that this kind of overbuild could \u201cend in tears\u201d for some. Again, it was not a comment about the whole market and does not reflect the wider context in which it was delivered.<\/p><\/blockquote>\n

Back to Equinox 2. Ofcom’s decision to delay their final decision will no doubt be welcomed by AltNets, although we suspect that Openreach’s many ISPs will be somewhat less than pleased. The ISPs are the ones putting pressure on Openreach to reduce their prices and thus enable them to stay competitive with newer entrants, while some of them may have already worked the discounts into their existing package pricing. A delay will thus cause some pain, but the operator has an answer for that.<\/p>\n

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

“Whilst we continue to share Ofcom\u2019s initial view that our offer isn\u2019t anti-competitive, it\u2019s important the regulator has time to consider all the feedback it has received fully and fairly, so our discounted Full Fibre prices won’t come into effect on 1st April. That said, we don’t think customers should be forced to pay higher prices because of this delay so, if Ofcom’s initial assessment is confirmed in May, we will ensure our customers benefit from Equinox 2 pricing from 1 April.<\/p>\n

Our offer is a response to customers, who want lower prices and long-term certainty to help them switch to faster, more reliable broadband connections. It also supports our continued multi-billion pound investment to upgrade the UK\u2019s broadband infrastructure.”<\/p><\/blockquote>\n

The big question now is whether or not the regulator will end up reaching a different conclusion from that of their provisional view, which would be quite a big development if it occurred. Meanwhile, consumers hoping for even cheaper FTTP broadband packages on Openreach’s network may have to wait a bit longer, since ISPs that haven’t yet adjusted their packages will now be more cautious.<\/p>\n

UPDATE 10:53am<\/strong><\/p>\n

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

Malcolm Corbett, INCA CEO, said:<\/strong><\/p>\n

“We welcome Ofcom\u2019s confirmation today that its role is to ensure a level playing field for all investors in UK full fibre. INCA and its members have worked hard to provide Ofcom with information and evidence on why its initial evaluation of BT wholesale discounts set out in the Equinox 2 pricing offer was insufficient.<\/p>\n

We will continue to work with Ofcom over the coming months to help them come to a proper conclusion. Fundamentally they must question why BT group are reducing their wholesale charges whilst increasing the prices that consumers pay for broadband.”<\/p><\/blockquote>\n

UPDATE 2:30pm<\/strong><\/p>\n

CityFibre<\/a> has now given their reaction.<\/p>\n

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

“Ofcom appears to be taking industry\u2019s concerns seriously. Taking more time to properly consider the impact of Equinox 2 is the right approach if UK consumers and businesses are to benefit from a healthy competitive market for the long term.”<\/p><\/blockquote>\n

UPDATE 19th March 2023 @ 4pm<\/strong><\/p>\n

After talking to a few sources, we believe that at least part of the reason for this delay is that some operators have argued that there may be miscalculations in Ofcom’s last wholesale market review. In short, this would mean that the Equinox 2 offer may be below the costs of an idealised operator.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ofcom has this morning announced that they will need “an additional two months” to undertake further analysis of Openreach’s “Equinox 2” discount scheme, which will delay the operator’s planned 1st April 2023 launch of cheaper wholesale prices on their Fibre-to-the-Premises (FTTP) based broadband ISP products.<\/p>\n","protected":false},"author":1,"featured_media":26544,"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-33982","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":"\nOfcom UK Delay Start of Openreach FTTP Broadband Price Cuts UPDATE3 - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Ofcom has this morning announced that they will need "an additional two months" to undertake further analysis of Openreach's "Equinox 2" discount scheme,\" \/>\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\/2023\/03\/ofcom-uk-delay-start-of-openreach-fttp-broadband-price-cuts.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ofcom UK Delay Start of Openreach FTTP Broadband Price Cuts UPDATE3 - 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