Ofcom allows Openreach to introduce new pricing offer for full-fibre broadband

LONDON, UK: The UK’s communications regulator, Ofcom, has today published its decision not to prevent Openreach from introducing its new pricing offer for full-fibre broadband, known as ‘Equinox 2’.

Under Ofcom’s rules, Openreach must notify the regulator of certain offers before they come into effect. This is to allow Ofcom to assess them before they are introduced, and where necessary to allow it to intervene to prevent them from being introduced.

On 14 December 2022, Openreach notified Ofcom of a new pricing offer for its full-fibre services (Equinox 2). This offer gives lower prices to retail providers – such as BT, Sky, TalkTalk and Vodafone – if they agree to use mainly Openreach’s full-fibre products for new orders instead of its legacy copper products.

Having carefully assessed the range of evidence available to Ofcom – including responses to its public consultation – it has decided not to prevent Equinox 2 from being introduced.

In reaching its view, Ofcom has considered the impact on:

  • Citizens and consumers: Ofcom’s 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.
  • Alternative networks: As a result of Equinox 2, ‘altnets’ are likely to face stronger competition from Openreach. However, Ofcom concludes that the conditional terms in the offer do not create a potential barrier to using altnets. Ofcom’s conclusion is therefore that Equinox 2 is consistent with network-based competition.
  • Internet service providers (ISPs): Ofcom considers that ISPs are likely to benefit from network-based competition. As explained above, Ofcom concludes that ISPs will continue to be free to use altnets where they wish to do so.
  • Openreach: Ofcom considers that not preventing Openreach from introducing Equinox 2 allows it to engage in network-based competition, without compromising Ofcom’s objective of promoting investment in gigabit-capable networks.

An Ofcom spokesperson said: “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’s a level playing field for all companies.

“With this in mind, and based on the evidence available to us, we don’t consider Openreach’s new pricing discounts to be anti-competitive.”

Ofcom has also considered the level of prices under Equinox 2, and concerns among some market participants about Openreach’s practice of discussing and developing discounts with retail providers. Having carefully assessed information from providers and altnets, Ofcom does not have concerns that warrant further investigation at this time.

Openreach has 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 31 March 2026. This may provide further clarity for altnets and their investors. However, Ofcom has not relied on these commitments in reaching its conclusions.

The decision by Ofcom not to prevent Openreach from introducing Equinox 2 has been welcomed by some, who argue that it will help to accelerate the roll-out of full-fibre broadband across the UK. However, others have expressed concerns that the offer could give Openreach an unfair advantage over its competitors, and that it could lead to higher prices for consumers in the long run. Only time will tell whether these concerns are justified.

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