Ofcom has ordered Openreach to withdraw a new Full Fibre discount after deciding it could damage competition. It is the first time the regulator has stopped one of the company’s commercial offers. Nobody has lost an existing broadband deal: the discount was due to begin in October and was aimed at broadband providers rather than households.
Openreach doesn’t sell broadband directly to you. It owns the network used by providers including BT, Sky, TalkTalk and Vodafone, which pay to connect their customers. Under the rejected offer, providers could have received £35 towards a new connection and saved up to £9.50 per month for as long as 30 months when they brought additional customers onto the network.
The Belfast Telegraph reported on Ofcom’s original proposal in July, when the regulator warned that the discount could make life much harder for competing fibre networks. Openreach disagreed and argued that providers could have turned the lower charges into better-value household packages. It says it will now review the final decision while introducing its other approved offers.
Image Credit: Ofcom
Ofcom’s unusual-looking office building in London, viewed from Southwark Bridge
Why would Ofcom stop prices coming down?
Ofcom’s concern is what happens after the attractive offers have done their work. Openreach is much larger than competing networks such as CityFibre, Fibrus and Hyperoptic. The regulator concluded that a smaller network might be unable to match this particular discount and still cover its costs, making it harder to attract enough customers to survive and grow.
That matters because having two or more networks available gives providers a reason to compete on price, speed and service. Ofcom allowed Openreach’s other planned offers to proceed because their discounts were much smaller. Its ruling is therefore against one unusually aggressive deal, not a ban on Openreach cutting prices or competing for new business.
