{"id":34069,"date":"2023-05-24T08:30:18","date_gmt":"2023-05-24T07:30:18","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=34069"},"modified":"2023-05-24T14:13:57","modified_gmt":"2023-05-24T13:13:57","slug":"ofcom-approve-openreachs-equinox-2-uk-fttp-broadband-price-cuts","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2023\/05\/ofcom-approve-openreachs-equinox-2-uk-fttp-broadband-price-cuts.html","title":{"rendered":"Ofcom APPROVE Openreach’s Equinox 2 UK FTTP Broadband Price Cuts UPDATE4"},"content":{"rendered":"

Ofcom<\/a> has this morning announced that it will NOT block Openreach<\/a>’s proposed \u201cEquinox 2<\/em>\u201d discount scheme for their Fibre-to-the-Premises (FTTP<\/a>) based broadband ISP products from being introduced, which came after rival networks raised competition concerns over the plans.<\/p>\n

Just to recap. Openreach<\/a> announced in December 2022 that it would introduce another round of wholesale discounts on their full fibre products from 1st April 2023 (here<\/a>), which would help ISPs on the same network to stay competitive with newer and often cheaper alternative networks (Summary of UK Full Fibre Builds<\/strong><\/a>). Lower prices could also boost take-up by consumers 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’ve already completed 10.3 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. But more than a few rival networks 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 full fibre market where Openreach<\/a> was traditionally more expensive and less dominant in coverage. This made it easier for AltNets to grow take-up, attract investment and gain support from third-party ISPs to their equivalent wholesale options.<\/p>\n

Despite the concerns, Ofcom<\/a> provisionally ruled in February 2023 that Openreach’s new offer was “not anti-competitive and is consistent with the rules<\/em>” (here<\/a>). But in March 2023 the regulator opted to impose a two-month delay on Equinox 2’s implementation after their related consultation resulted in some responses that “raised issues which require further assessment<\/em>“.<\/p>\n

The regulator didn’t provide an example of the “issues<\/em>” they were talking about, but industry sources did indicate to ISPreview.co.uk that one of them may relate to some possible miscalculations in Ofcom\u2019s last wholesale market review (i.e. ones that could mean the Equinox 2 offer may end up below the costs of an idealised operator). Today, Ofcom finally passed down their judgement (here<\/a>).<\/p>\n

Ofcom’s Statement<\/strong><\/p>\n

Having carefully assessed the range of evidence available to us \u2013 including responses to our public consultation \u2013 we have decided not to prevent Equinox 2 from being introduced.<\/p>\n

In reaching our view, we have considered the impact on:<\/p>\n

Citizens and consumers: <\/strong>Our conclusion is that Equinox 2 is consistent with promoting investment in gigabit-capable networks by Openreach and other operators and promoting network-based competition, ultimately delivering better consumer outcomes.<\/p>\n

Alternative networks:<\/strong> As a result of Equinox 2, \u2018altnets\u2019 are likely to face stronger competition from Openreach. However, we conclude that the conditional terms in the offer do not create a potential barrier to using altnets. Our conclusion is therefore that Equinox 2 is consistent with network-based competition.<\/p>\n

Internet service providers (ISPs):<\/strong> We consider that ISPs are likely to benefit from network-based competition. As explained above, we conclude that ISPs will continue to be free to use altnets where they wish to do so.<\/p>\n

Openreach:<\/strong> We consider that not preventing Openreach from introducing Equinox 2 allows it to engage in network-based competition, without compromising our objective of promoting investment in gigabit-capable networks.<\/p>\n<\/blockquote>\n

The regulator added that it has also considered the level of prices under Equinox 2, and concerns among some market participants about Openreach\u2019s practice of discussing and developing discounts with retail ISPs. Having carefully assessed information from providers and altnets, Ofcom added that they “do not have concerns that warrant further investigation at this time<\/em>“.<\/p>\n

However, Openreach has since informed Ofcom that – in response to concerns raised – it plans to make certain commitments regarding its future conduct, including “not having any current plans to change its Equinox 2 rental prices and no intention to initiate further changes until at least 31st March 2026<\/em>“. This may provide further clarity for altnets and their investors. Ofcom added that they have not relied on those commitments in reaching their conclusions.<\/p>\n

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

“Our overriding objective is to bring better broadband to people across the UK, by promoting competitive investment in high-speed networks and making sure there\u2019s a level playing field for all companies.<\/p>\n

With this in mind, and based on the evidence available to us, we don\u2019t consider Openreach\u2019s new pricing discounts to be anti-competitive.”<\/p><\/blockquote>\n

Katie Milligan, Openreach’s Chief Commercial Officer, said:<\/strong><\/p>\n

“This is good news for customers as it means lower prices and long-term certainty \u2013 encouraging the switch to faster, more reliable broadband connections. It\u2019s also good news for the UK, as it supports our continued multi-billion-pound investment in upgrading the country\u2019s broadband infrastructure.<\/p>\n

We take our legal and regulatory obligations extremely seriously and we\u2019ll continue to compete fairly whilst delivering an unrivalled, nationwide service and choice for customers.”<\/p><\/blockquote>\n

A Virgin Media<\/a> (VMO2) spokesperson said:<\/strong><\/p>\n

“Encouraging and supporting investment is crucial if Ofcom is to meet its own strategic priorities to drive fixed network competition at scale. While we\u2019re pleased Ofcom took more time to review these proposals, it must be prepared to act decisively in future to keep BT<\/a> in check and protect its own long-term objectives. We are now carefully considering this decision.”<\/p><\/blockquote>\n

The move will no doubt be welcomed by most ISPs that use Openreach’s broadband network, as well as consumers who are now set to enjoy even lower prices, while AltNets may at least be pleased that they won’t necessarily have to worry about a hypothetical Equinox 3 arriving in the near future – despite being otherwise annoyed at the regulator’s overall decision.<\/p>\n

On the other hand, AltNets are unlikely to take the incumbent at their word, as that level of trust has yet to be established – particularly after the FT’s controversial interview with BT<\/a>’s CEO, Philip Jansen<\/strong>, which appeared to warn that their fibre rollout was now an \u201cunstoppable machine<\/em>\u201d that would ultimately \u201cend in tears<\/em>\u201d for its rivals. But BT has since argued that Jansen’s comments were taken out of context (here<\/a>).<\/p>\n

UPDATE 9:13am<\/strong><\/p>\n

This is the detail of precisely what commitment’s Openreach’s CEO, Clive Selley, has made to Ofcom and the industry on future pricing.<\/p>\n

Openreach’s Commitments<\/strong><\/p>\n

Assuming that Openreach is able to proceed with its Equinox 2 offer, I would put the following statement out to industry to address the concerns that have been expressed:<\/p>\n

a) Openreach does not have any current plans to change its Equinox 2 FTTP<\/a> rental prices once launched and does not intend to initiate any further such changes during this market review cycle (i.e. until 31 March 2026), aside from those changes provided for as part of the Equinox offer itself (e.g., CPI-based price increases);<\/p>\n

b) Openreach will, of course, need to consider requests for price changes if they are made by its CP customers and will need to consider its pricing in the event of any material market change. The usual process will be followed in these circumstances, as envisaged in the WFTMR; and<\/p>\n

c) In the event that circumstances arise which necessitate a further price review, Openreach commits that it would not propose any new form of conditionality relating to the volume or range of services offered by Openreach in respect of FTTP rental prices, which goes beyond the conditionality already contained in the Equinox offer.<\/p>\n<\/blockquote>\n

UPDATE 10:08am<\/strong><\/p>\n

We’ve had a comment from the CEO of the Independent Networks Co-operative Association<\/a> (INCA).<\/p>\n

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

“Whilst we are still reviewing Ofcom\u2019s statement in full, INCA is initially disappointed with Ofcom\u2019s decision. Not only do we believe that this outcome will have a negative impact on competition and investment and ultimately consumers, we also believe that Ofcom\u2019s approach to taking this decision was flawed. This initially seems to be an illogical decision based on a questionable process.<\/p>\n

Government policy and regulatory decision making now appear to us to be out of sync when it comes to infrastructure competition. We call on government to clarify its Statement of Strategic Priorities to Ofcom to ensure that the regulator is compelled to put issues of infrastructure competition and investment at the heart of its decision-making process.”<\/p><\/blockquote>\n

UPDATE 11:57am<\/strong><\/p>\n

CityFibre<\/a>’s boss has added his comment.<\/p>\n

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

“We are disappointed Equinox 2 has been approved and will be undertaking a thorough review of Ofcom\u2019s decision. We are, however, pleased to see Ofcom\u2019s pressure has brought about the end of Equinox, with a commitment from Openreach to make no further changes to its wholesale pricing until April 2026.<\/p>\n

We must not forget that while introducing price discounts to bind its wholesale customers and damage emerging competition, BT is at the same time significantly increasing prices for millions of its retail consumers. Ofcom must ensure that competition is effective and sustainable if consumers are to benefit.”<\/p><\/blockquote>\n

UPDATE 1:17pm<\/strong><\/p>\n

We’ve had some more comments come in.<\/p>\n

Ahmed Essam, CEO of Vodafone<\/a> UK, said: <\/strong><\/p>\n

“As CEO of Vodafone<\/a> UK, I fully support Openreach’s new full-fibre wholesale pricing proposal, Equinox II.<\/p>\n

It will help broadband retailers offer more attractive packages and UK consumers will benefit from good value, choice, and innovation.<\/p>\n

But we want to continue offering our most vulnerable customers affordable social tariffs, too. And we can\u2019t do this unless our partners – Openreach, CityFibre, and others – offer a substantially reduced wholesale social tariff.<\/p>\n

We hope Ofcom will support us in this request.<\/p>\n

Our goal is to make full-fibre easily available and affordable for all customers, including those on benefits, and we believe that by working together, we can build a full-fibre Gigabit UK that is fair for everyone.”<\/p><\/blockquote>\n

Tom Williams, CEO and Co-Founder of Lit Fibre, said:<\/strong><\/p>\n

“Ofcom’s approval of Openreach’s Equinox 2 scheme is not surprising, but we question whether this will really lead to consumer benefit or just prove to be a margin boost to the large retail ISP\u2019s using Openreach\u2019s network.<\/p>\n

Lit Fibre builds its own network and sells services direct to consumers which means we can always provide the best level of service for the best price. Our promise to customers is never to introduce mid-contract price hikes, assuring our customers that they really are getting the best price from the outset.<\/p>\n

Our focus on a direct-to-consumer model enables us to put the customer first and deliver exceptional quality service and customer support.”<\/p><\/blockquote>\n

Tristia Harrison, CEO of TalkTalk<\/a>, said:<\/strong><\/p>\n

“This decision is good news for consumers, competition, and the ongoing rollout of full fibre. TalkTalk<\/a> is pleased to be uniquely connecting consumers and businesses to full fibre at scale, through both Openreach, and alternative fibre builders. Today\u2019s decision will mean that full fibre remains affordable, whilst securing roll-out investment and maintaining thriving competition.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Ofcom has this morning announced that it will NOT block Openreach’s proposed \u201cEquinox 2\u201d discount scheme for their Fibre-to-the-Premises (FTTP) based broadband ISP products from being introduced, which came after rival networks raised competition concerns over the plans.<\/p>\n","protected":false},"author":1,"featured_media":34070,"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-34069","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 APPROVE Openreach's Equinox 2 UK FTTP Broadband Price Cuts UPDATE4 - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Ofcom has this morning announced that it will NOT block Openreach's proposed \u201cEquinox 2\u201d discount scheme for their Fibre-to-the-Premises (FTTP) based\" \/>\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\/05\/ofcom-approve-openreachs-equinox-2-uk-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 APPROVE Openreach's Equinox 2 UK FTTP Broadband Price Cuts UPDATE4 - 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