Ofcom proposed on Tuesday to block a discounted wholesale offer from Openreach, the first time the regulator has ever moved to stop a commercial deal from BT’s network arm. The offer would have given internet providers up to £9.50 off per customer per month, for as long as 30 months, when they connected more new full-fibre customers to Openreach than their usual run rate.
The structure is what troubled the regulator. Because the discount applies only to sign-ups above a provider’s normal level, it targets precisely the marginal customers that alternative networks depend on for growth.
What Ofcom said
The regulator concluded the pricing was “not fair and reasonable” and risked harming competition in a wholesale full-fibre market that is still developing. Rivals might feel compelled to match the pricing while being unable to recover their costs, which Ofcom said would undermine competition and eventually push prices up.
“Openreach must be able to compete, but they cannot use their significant market power to drive other networks out of the market,” said Natalie Black, Ofcom’s group director for infrastructure and connectivity.
