{"id":48133,"date":"2026-09-21T17:02:56","date_gmt":"2026-09-21T16:02:56","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=48133"},"modified":"2026-09-21T17:03:16","modified_gmt":"2026-09-21T16:03:16","slug":"vmo2-and-altnets-risk-hastening-deregulation-of-openreachs-uk-broadband","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2026\/09\/vmo2-and-altnets-risk-hastening-deregulation-of-openreachs-uk-broadband.html","title":{"rendered":"VMO2 and Altnets risk hastening deregulation of Openreach’s UK broadband"},"content":{"rendered":"

Ofcom<\/a> will shortly announce the outcome of their provisional proposal<\/a> to block one of several discounts that Openreach<\/a> (BT<\/a>) had planned to help them stay competitive and attract new full fibre (FTTP<\/a>) broadband ISP customers. But a new report from Enders Analysis<\/a> warns that rival networks might, in supporting the regulator, ultimately end up hastening the incumbent’s deregulation to their detriment.<\/p>\n

Network access provider Openreach<\/a> notified their broadband ISP partners about a bunch of offer extensions and new discounts for their Fibre-to-the-Premises<\/strong> (FTTP<\/a>) lines back in June 2026 (here<\/a>). Several of these were targeted at New\u2011to\u2011Network<\/strong> (NTN) services, which usually means a property (house etc.) where there have been no Openreach<\/a> products and services on the relevant line at any point in the last 90 consecutive days prior to the date of the FTTP<\/a> order (excluding any premises on \u2018New Sites\u2019, like new build homes).<\/p>\n

NOTE:<\/strong> The BT<\/a> Group is investing c.\u00a315bn for Openreach to build their full fibre lines to cover 25 million premises by December 2026, and they hold an ambition to cover \u201cup to<\/em>\u201d 30 million by 2030 (c.80% of the UK). The operator has already covered 23.5 million premises.<\/div>\n

However, Ofcom<\/a> later provisionally proposed to block one of those discounts (i.e. the Incremental New to Openreach Offer), which gave retail internet providers (ISPs) a monthly discount for bringing new full-fibre customers onto Openreach\u2019s network. This offer applies only to new customers above an ISP\u2019s normal number of new sign-ups. The discount could have been very substantial \u2013 up to \u00a39.50 per customer for up to 30 months.<\/p>\n

The regulator\u2019s view, after considering some complaints from Virgin Media<\/a> (O2<\/a>) and several alternative networks, was that this offer was \u201cnot fair and reasonable and could harm the development of network competition<\/em>\u201c. Ofcom<\/a> said that Openreach was \u201ctargeting significant discounts at new customers that are key to altnets\u2019 ability to grow their customer base, while leaving prices for other customers unchanged<\/em>\u201c, which they feared could \u201cundermine sustainable competition<\/em>\u201c.<\/p>\n

Naturally Openreach disagreed and countered that, in a competitive market like the UK, they \u201cdon\u2019t believe that regulation should protect poor business models<\/em>\u201d (a snipe at the questionable financial stability of many altnets). In previous years Ofcom has tended to approve such discounts and viewed them as being of benefit to consumers, while helping Openreach’s partner ISPs to stay price competitive.<\/p>\n

The Enders Analysis study<\/strong><\/span><\/h3>\n

A new report from analyst firm Enders Analysis, which has been seen by ISPreview, warns that there may be a longer-term downside to supporting Ofcom’s provisional decision. “As full fibre roll-outs wind down and the market matures, Ofcom\u2019s protections for the altnets will start to look increasingly anachronistic, with competition at the wholesale level existing in form only given Openreach\u2019s lack of ability to respond<\/em>,” said Enders.<\/p>\n

The purpose of competition is to reduce prices (or increase quality) and insisting on a price floor could become increasingly tricky for the regulator to defend, given that the “price floor being set for Openreach is (by design) based off altnet build efficiencies rather than those of Openreach<\/em>,” which they say effectively locks customers into “more expensive and less efficient networks<\/em>“.<\/p>\n

However, Enders notes that Ofcom’s recent Telecoms Access Review 2026<\/strong><\/a> (TAR) may give the regulator a route out of this conundrum.<\/p>\n

Enders Analysis statement<\/strong><\/p>\n

Openreach had been lobbying for full de-regulation in areas with established altnet presence and high market share at least at some point before the next review (i.e. having an \u2018Area 1\u2019 of fully competitive postcodes). While it did not achieve this, Ofcom did give itself scope to give Openreach more freedom in specific areas via the approval of Openreach geographic offers, in other words a piece-by-piece progressive geographic deregulation, only available upon application by Openreach.<\/p>\n

Ofcom stated in the TAR that in considering whether to allow geographic offers it would consider the \u201cstrength of competition and the extent to which it has developed<\/em>\u201d, in particular considering (among other factors) altnet take-up, market share, retail\/wholesale pricing and financial positions, as well as considering where Openreach\u2019s offer pricing is in relation to the REO [Reasonably Efficient Operator] range.<\/p>\n

This clearly still gives Ofcom a lot of leeway in its judgement, but in our view it will be difficult for Ofcom to not allow Openreach more pricing flexibility (say, down to the bottom end of the REO range, or to an Openreach cost level, both of which would be at around \u00a314 a month) should it propose an offer where altnets have strong market share (say 30%+, or clearly heading that way), and are pricing aggressively themselves (as nearly all are). We do not expect Openreach to imminently decide to propose this type of offer, but it could well do in 2027, especially if its revenue\/EBITDA progression is strong in the interim.<\/p>\n

While altnet financial positions remain weak, and Ofcom could use this as a reason to continue protecting them, we think this could prove a difficult argument to sustain; the cable industry took over 20 years to coalesce into Virgin Media<\/a>, with numerous debt restructurings along the way, so waiting for financial stability could be a very long wait indeed<\/p><\/blockquote>\n

In short, Enders expresses the view that Ofcom cannot protect altnets from competition indefinitely and the current strategy may merely end up delaying the difficult decisions that have to be made as part of market consolidation and rationalisation, such as writing off over-costed investment and aggressively cutting costs.<\/p>\n

Admittedly it could perhaps be said that most altnets have a fairly neutral to negative view of Ofcom and don’t view the regulator as having done much to protect them, which as above is open to debate and you could probably write a book on that one.<\/p>\n

The real risk here, according to Enders, is that Ofcom’s restriction, if it is indeed imposed as most of us expect, is likely to be “time-limited, with VMO2-only areas and those with high altnet market share likely to be de-regulated first, and within the current regulatory cycle<\/em>.”<\/p>\n

Put another way, Enders says VMO2 and altnets need need to be careful that they “do not hasten competition from Openreach that they will struggle to bear<\/em>“, as well as prepare for its consequences. In particular, setting prices (whether retail or wholesale) at a much lower level than existing cost bases justify could end up both hastening competition (through appearing to have sustainable market share) and making low prices in their particular geographic areas a permanent local feature, “making any recovery to a sustainable model much less likely<\/em>“.<\/p>\n

Enders makes clear that, for VMO2 and altnets, the focus should instead switch from “market share grabs<\/em>” and move to “building a sustainable business model<\/em>” (i.e. gaining scale economics through consolidation, achieving a best-practice cost base and narrowing the ARPU gap to competitors, with prior capex overspend dealt with through write-offs and potentially debt restructuring). Easier said than done in today’s competitive environment with its many complex dynamics. “Pursuing subscriber growth without these other factors will simply hasten failure<\/em>,” concluded the report.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ofcom will shortly announce the outcome of their provisional proposal to block one of several discounts that Openreach (BT) had planned to help them stay competitive and attract new full fibre (FTTP) broadband ISP customers. But a new report from Enders Analysis warns that rival networks might, in supporting the regulator, ultimately end up hastening […]<\/p>\n","protected":false},"author":1,"featured_media":48058,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[56,36,69,475],"class_list":["post-48133","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-fttp","tag-ofcom-regulation","tag-bt-openreach","tag-virgin-media"],"share_on_mastodon":{"url":"https:\/\/mastodon.social\/@ispreview\/117309877654908181","error":""},"yoast_head":"\nVMO2 and Altnets risk hastening deregulation of Openreach's UK broadband - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Ofcom will shortly announce the outcome of their provisional proposal to block one of several discounts that Openreach (BT) had planned to help them stay\" \/>\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\/2026\/09\/vmo2-and-altnets-risk-hastening-deregulation-of-openreachs-uk-broadband.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"VMO2 and Altnets risk hastening deregulation of Openreach's UK broadband - 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