June 5, 2023
Under Ofcom’s rules, Openreach is obliged to notify Ofcom of certain offers before they come into effect so that the regulator can assess them and, where necessary, 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). The 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.
Ofcom says that, having carefully assessed the range of evidence available, 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: because 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 and that Equinox 2 is therefore consistent with network-based competition;
- internet service providers (ISPs): Ofcom considers that ISPs are likely to benefit from network-based competition and will continue to be free to use altnets where they wish to do so; and
- 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.
Overall, Ofcom does not consider Openreach’s new pricing discounts to be anti-competitive.
Ofcom says that it 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, the regulator says that it 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 says that it has not relied on these commitments in reaching its conclusions. To read Ofcom’s statement in full, click here and to read our thoughts see here.