Ofcom has proposed blocking a heavily discounted Openreach Full Fibre deal amid concerns it could squeeze competing networks out of the market and leave households with less broadband choice. It would be the first time the regulator has stopped one of Openreach’s commercial offers from going ahead.
Openreach doesn’t normally sell broadband directly to you. It operates the network used by BT, Sky, TalkTalk, Vodafone and numerous other providers, which pay Openreach to connect and serve their broadband subscribers. Openreach remains by far the largest fixed network in the UK, giving it considerably more pricing power than its competitors.
The proposed offer would reward broadband providers for bringing more new Full Fibre connections onto Openreach than they would normally be expected to deliver. Ofcom believes those extra sign-ups are precisely the people smaller networks such as CityFibre, Hyperoptic and Community Fibre need to win if they’re going to survive and grow.
Image credit: Ofcom
The highly recognisable Ofcom office building, viewed from Southwark Bridge
The discount could be worth £285 for each new connection
Openreach’s ‘Incremental New to Openreach Offer’ would give providers a discount of up to £9.50 a month for as long as 30 months on qualifying new connections. That adds up to as much as £285 for each person moved onto its network, although there’s no guarantee that the full saving would appear in the price of their broadband package.
Ofcom says competing networks already charge low prices across their wider customer bases as they try to persuade people to switch. Matching a targeted Openreach discount of this size could leave them unable to recover their costs. Around half of the households currently able to order Full Fibre still haven’t done so, making these unconnected homes particularly valuable to every network.
Two other Openreach offers have provisionally escaped intervention. One provides a £50 payment for extra connections won in areas covered by Virgin Media, while another limits what providers pay on average for new higher-speed packages. Ofcom believes these smaller incentives shouldn’t prevent an efficient rival from competing. Its consultation closes on 27 August, with a final decision expected by the end of September.
