Ofcom has permanently blocked Openreach's Incremental New to Openreach Customer Offer, stopping the £35 FTTP connection discount before it could take effect on October 1. The regulator said the charges were not fair and reasonable. Openreach had planned the offer as one of several pricing changes aimed at new customer sign-ups.
Openreach pricing plans
In June, Openreach notified Ofcom of the pricing plans. The blocked offer would have given a £35 connection discount and a monthly reduction of up to £9.50 for as long as 30 months. It would have applied only to customers above each ISP's normal level of new Openreach signups, which meant the benefit was targeted rather than broad-based.
Ofcom provisionally decided in July to block the offer and consulted the industry before making the prohibition permanent. Openreach is BT's functionally separate network division and Britain's largest fixed-line infrastructure provider, so the decision affects a central part of its retail-facing pricing model.
Ofcom and competing networks
Ofcom said it was particularly concerned about alternative network operators, or altnets, which need to attract customers to grow and compete with Openreach. The regulator concluded that rivals might not be able to match the discount and recover their costs at the same time. That is why a targeted new-customer rebate can become hard to replicate across competing networks even when the headline price looks limited to a narrow group.
The ruling leaves Openreach's other proposed discounts in place. One allowed offer is a one-off £50 rebate for connections above an ISP's usual number of new Openreach customers in areas served by Virgin Media O2. Another allowed offer gives communications providers a free connection when net new Ethernet demand exceeds 90 percent of their historical run rate.
Virgin Media O2 and nexfibre
nexfibre called Ofcom's decision a positive step toward protecting competition in the UK market, and Virgin Media O2 welcomed the intervention. Ofcom previously declined to intervene in Openreach discount schemes including Equinox and Equinox 2, which gives this ruling a sharper edge for providers watching which price cuts can still go ahead.
For ISPs, the immediate result is simple: the blocked Incremental New to Openreach Customer Offer will not launch, while the remaining discounts can be used under Ofcom's rules. The unanswered issue is how many ISPs or customers would have qualified for the blocked offer, and that detail was not stated.
