Even though the UK’s fibre sector is hot right now, with unprecedented availability to gigabit access, a row is brewing in the industry following UK comms regulator Ofcom’s indication it will not intervene to prevent Openreach from introducing new wholesale pricing arrangements for its full-fibre services, known as the Equinox 2 offer.
The broadband provision division of BT first notified Ofcom of its intention to adopt a new framework for wholesale pricing on its network on 14 December 2022.
Ofcom now says that after carefully assessing Openreach’s offer – taking into account the interests of consumers, as well as the impact on competition among rival retail broadband providers – its provisional view is that we should not take any regulatory action.
Moreover, in its statement regarding the issue, it said it considered the Equinox 2 offer as not anti-competitive and that it was consistent with the rules it had consulted on before introducing them under its full-fibre market review in 2021.
Ofcom stressed that maintaining these rules for the period of the review was also important to achieving certainty for all companies looking to invest in broadband networks.
In conclusion, in the regulator’s provisional view, the proposed offer was consistent with what it said was its primary strategic goal of promoting investment in high-speed networks to deliver fast, affordable broadband to people and business across the UK.
Following its assessment, Ofcom said it was inviting responses to its consultation, and there has been no shortage of replies, many critical of the proposal. The Independent Networks Co-operative Association (INCA), the trade body for the UK’s independent network providers, said it was frustrated by Ofcom’s preliminary view, and that in its analysis of Equinox 2, the scheme deliberately threatens competitiveness and makes it harder for new entrants to compete in the full-fibre market.
In addition, INCA believes that should Ofcom fail to block Equinox 2, £20bn of investment will be at risk, significantly slowing progress towards the roll-out of full-fibre connectivity broadband to all parts of the UK. In effect, it said a decision not to block Equinox 2 runs contrary to the UK government’s policy of creating and maintaining a competitive market for broadband services in the UK.
“Despite the combative comments made by [BT] … which make the company’s monopolistic desires perfectly clear, Ofcom seems to not realise that through this proposal, BT is attempting to re-establish the monopoly it enjoyed in the copper market over the country’s full-fibre future, which left the UK languishing at the bottom of international full-fibre league tables,” said INCA CEO Malcolm Corbett. “If the company is doing as well as Philip Jansen wants the markets to believe it is, price cutting can only be aimed at killing the competition.
“It is abundantly clear that the best way to get networks built quickly and to ensure low prices for consumers in the long-term is to maintain a competitive wholesale broadband market,” he said.
“Should Ofcom fail to block the Equinox 2 proposal, it will be acting against that objective. INCA will engage with Ofcom’s consultation process and hopes that Ofcom will think carefully about the serious damage which will be inflicted on the UK’s proposed full-fibre broadband roll-out before making a final decision on whether to approve or decline BT Openreach’s self-interested and anti-competitive proposals.”