UK watchdog still not ruled on Openreach wholesale fiber discounts
- Reference: 1679061607
- News link: https://www.theregister.co.uk/2023/03/17/ofcom_delays_decision_on_openreach/
- Source link:
The move concerns discounts offered by Openreach, the infrastructure arm of the UK’s former state-owned telecoms monopoly BT, for ISPs that use its fiber network to deliver services to customers.
The issue has already proved controversial, with rival network operators [1]complaining that Openreach is unfairly undercutting them . Despite this, regulator Ofcom had previously indicated that it was not minded to prevent Openreach from introducing Equinox 2.
[2]
Ofcom had planned to publish a final decision on Equinox 2, following a consultation process, by the end of March. But it has now announced that it received a number of detailed responses, some of which “raise issues which require further assessment.”
[3]
[4]
As a consequence, Ofcom said that it expects to take an additional two months to complete the extra analysis required and issue a final decision. However, the Equinox 2 offer was due to launch on April 1.
“To provide certainty and stability for industry, our view is that it would not be appropriate for the offer to launch until we issue our final decision,” Ofcom said in its announcement.
[5]
Further, Ofcom hinted that it was prepared to use its powers under the Communications Act 2003 to block the launch, unless Openreach voluntarily deferred it.
This would not appear to be necessary, as Openreach has issued a statement saying that it will defer the new pricing scheme.
“Whilst we continue to share Ofcom’s initial view that our offer isn’t anti-competitive, it’s important the regulator has time to consider all the feedback it has received fully and fairly, so our discounted Full Fibre prices won't come into effect on 1st April,” Openreach stated.
[6]
The company also said that if Ofcom's initial assessment is confirmed, it will ensure that customers benefit from Equinox 2 pricing backdated to April 1.
Equinox 2 is an extension of the original Equinox deal that came into effect in October 2021. This offered ISPs incentives over the next 10 years to get new subscribers to sign up for fiber-to-the-premises (FTTP) instead of legacy connections using copper cabling, part of moves to get more of the UK on fibre broadband.
Those incentives were largely discounts on wholesale access to Openreach's fiber network. This caused alternative network providers (altnets) to complain that it gave Openreach an unfair advantage, as ISPs had a financial incentive to choose it instead of them when signing up new subscribers onto fiber connections.
One altnet provider, CityFibre, went as far to take Ofcom to the Competition Appeal Tribunal over its decision to allow the original Equinox scheme, but its [7]appeal was rejected .
Openreach’s position has perhaps not been helped by an article in the Financial Times in February, in which BT Group CEO Philip Jansen was quoted as saying that his company’s broadband network is an “unstoppable machine” and that the situation would “end in tears” for many rival networks.
Ofcom has taken the step of [8]publishing its correspondence with Jansen regarding the issue, where he explains that his comments “have been taken out of context”, after Ofcom CEO Dame Melanie Dawes told him that the report had caused “significant concern.”
The delay in Ofcom’s decision therefore raises the prospect that the regulator may not give permission for Equinox 2, which was to include a mix of additional incentives to encourage the take-up of higher bandwidth services.
Media and telco analyst Paolo Pescatore of PP Foresight wondered whether Ofcom may now be having second thoughts.
“Is Ofcom having a change of heart towards rival infrastructure suppliers like Virgin Media O2 and other altnets that [Openreach] prices are too low, squeezing them out of the market?” Pescatore said.
The regulator now faces a difficult decision, he added, following earlier comments suggesting that it will not block Equinox 2, while there has been an outcry among the altnets about its effect on their ability to compete.
[9]BT keeps the faith in 'like fury' fiber broadband buildout as revenues dip
[10]Rebel without a clause: ISP promises broadband with no contract
[11]With pay strikes ending, BT merges divisions to save £100m in annual costs
[12]Openreach offers more wholesale fiber discounts, rivals call foul
“Ofcom now has a tough challenge of assessing the impact of these new prices and whether it will negatively impact the market and choice,” Pescatore told us.
For its part, Virgin Media O2 declined to comment other than saying “Ofcom’s decision to delay is clear.”
Meanwhile, Openreach insisted that it is merely trying to do its part to help upgrade the country’s infrastructure to modern fiber networks.
“Our offer is a response to customers, who want lower prices and long-term certainty to help them switch to faster, more reliable broadband connections. It also supports our continued multi-billion pound investment to upgrade the UK’s broadband infrastructure,” the company said.
Responding to news of Ofcom's decision to extend its review of Equinox 2, Greg Mesch, CEO at CityFibre today told us: "Ofcom appears to be taking industry's concerns seriously. Taking more time to properly consider the impact of Equinox 2 is the right approach if UK consumers and businesses are to benefit from a healthy competitive market for the long term." ®
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[1] https://www.theregister.com/2022/12/19/openreach_offers_more_fiber_discounts/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZBScrs9fP-f7LhXaXURxXgAAAFE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZBScrs9fP-f7LhXaXURxXgAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZBScrs9fP-f7LhXaXURxXgAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZBScrs9fP-f7LhXaXURxXgAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZBScrs9fP-f7LhXaXURxXgAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2022/07/22/cityfibre_openreach_appeal/
[8] https://www.ofcom.org.uk/about-ofcom/public-correspondence
[9] https://www.theregister.com/2023/02/02/bt_sees_revenue_drop_3/
[10] https://www.theregister.com/2023/03/13/rebel_internet_contract/
[11] https://www.theregister.com/2022/12/16/with_one_strike_ending_bt/
[12] https://www.theregister.com/2022/12/19/openreach_offers_more_fiber_discounts/
[13] https://whitepapers.theregister.com/
Re: "with rival network operators complaining that Openreach is unfairly undercutting them"
This seems common, in our area there has been bugger-all investment but as soon as an altnet appears they make promises that scupper those plans, and then fail miserably to actually deliver on them.
I think BT's comments are not out of context and in reality make that perfectly clear.
AC as sadly we have to use some Openreach fibre anyway...
Re: "with rival network operators complaining that Openreach is unfairly undercutting them"
They've always done that kind of thing.
I've had the same problem with leased lines.
One workplace, they ordered a leased line and the only place that served us anywhere near reasonably was BT.
I took over the IT three years later. No leased line. Every six months or so, someone would kick up a stink, force BT to do something, they'd come to site, put a piece of tubing through somewhere, and then leave site never to return. It happened so often, the tubing they used changed several times over the course of those installs and was always left in place (eventually, there would have been a point where trying to join that tubing simply wouldn't ever have been possible without replacing the tubing from previous installs).
I decided not to propagate this nonsense when I took over. All the availability checkers said that there was no existing connectivity to the (quite rural) site, except through BT. So unless we wanted to spend six-figures-plus on installing a line to the nearest town, we could only use BT. That's what the availability checkers repeatedly said for all kinds of companies we tried.
So I decided to ignore them. I went straight to Virgin Media and told them our problem. They realised that actually they had a customer nearby which they could piggy-back off, and because of the rural postcode thing it wouldn't have appeared on the availability checkers. We put in an order with them.
Literally THE NEXT DAY, I had BT engineers crawling over our (privileged) site, uninvited. I had them removed. They were suddenly trying to put all the tubing and blow the fibre in order to complete a THREE YEAR OLD installation contract that they had never fulfilled. We escalated that with them and cancelled the contract. They tried to resist, and kept turning up to site uninvited to "complete your install" even after the contract was cancelled. BT claimed all kinds of contractual disputes with us, and then I said... okay... install.
Turns out - and I already knew - that they couldn't. The local exchange simply never had capacity enough, and never had enough, to install our line anyway. I know that, because their engineers knew that, and a cup of tea and a chocolate hobnob go a long way.
When they finally admitted that, we told them never to contact us again. We even terminated our ISDN/analog lines and went full SIP once the VM leased line was up.
And the VM line went live just a few weeks after our order with them. It's still in use, still doesn't appear on the availability checkers, and has provided flawless service for nearly 10 years now, including a 10Gbit upgrade.
So for three years plus, BT were basically pretending to install our line, never had any intention of doing so, and couldn't even if they'd wanted to without huge investment in the local exchange (which was never going to happen). Then they lied about it, tried to bluff us repeatedly and somehow found out that Virgin were delivering a line and then IMMEDIATELY turned up to try to look like they were doing something about it once again. And action only happened ONCE we basically found a way to use a competitor that they thought they didn't have.
As far as I remember, there are still about half-a-dozen unoccupied pieces of tubing underneath various buildings at that site, that never were joined, touched or filled after their install. And a shiny VM line right next to them.
Another part of the same site, about half-a-mile down the road... sadly BT only. Virgin say they could deliver to it but the costs were stupendous because it's the wrong direction (i.e. further away from their kit). We got another leased line over there (for connecting sites and for redundancy) from BT and we have nothing but trouble with it. They delivered only TWENTY MINUTES before our final, business-critical deadline that we informed them of nearly a year in advance, leading me to have a full and complete backup plan in action involving point-to-point wifi and church steeples (and I already had all the permissions lined up, I just needed to say the word). The engineer who finally saved their butt on delivery of that contract nearly got himself removed from site too, because he was so rude (mainly because his bosses were telling him that this HAD TO COMPLETE there and then and the guy took his frustrations out on his customer too).
Re: "with rival network operators complaining that Openreach is unfairly undercutting them"
Wow, that is barely believable. I'm not saying for a minute that I don't believe you, this is pretty much the definition of "you couldn't make it up"
Well I'm not going to be a BT customer firstly I don't have FTTP from BT in my area and they only offer 100mb/s upload which is frankly pathetic. City Fibre offer 1GB up and down, if they can manage it then so can BT and Virgin, they've been holding us back for years now.
On a slightly (un)related note a word of warning, avoid any ISP offering an eero router that comes with Amazon built-in and send data about your network and devices to Amazon, probably DNS data too, so avoid Giganet and TalkTalk for starters.
Ofcom doing something forward looking?
"our view is that it would not be appropriate for the offer to launch until we issue our final decision"
Finally an Ofcom decision (even in this state of indecision) that prevents a potential problem rather than trying to fix the damage afterwards.
I believe BT still acts in concert across its divisions, despite repeated assurances over the years to the contrary.
A full separation would get my vote.
This statement from the BT Group website is just window dressing: "In October 2018, Openreach became a legally separate company from BT, with our own board and strategy."
The sentence directly following that says it all: "The company is a wholly owned subsidiary of BT Group."
https://www.bt.com/about/bt/our-company/group-businesses
Zzzzzzzzzzzzzzzzzzzzzzz
See up enough.
Fiber? Where did that come from?
Fiber? What is this stuff. Can we have a bit of proper English. Fibre it is and always has been. Look in thje dictionary.
Re: Fiber? Where did that come from?
Muphry's law strikes again.
"with rival network operators complaining that Openreach is unfairly undercutting them"
When I was trying to get a private FTTP company into my local area, I had to get sufficient people to show interest before the private company would "put spades in the ground".
BT offered 2 years free broadband access (via a letterbox drop) to everyone in the largest of the 4 villages in the area, to try to scupper me reaching the required signups.
Unfortunately for BT, so many people were fed up of their sh1t service, that it didn't slow the signup rate noticeably.
I did contact OFCOM, but they said that BT could offer special discounts in small areas as a promotion if they wanted.
Anon as during the previous few years I had meetings up to Area Manager level with many BT staff trying to convince them to take the government money to upgrade us, so they know who I am and where I live. I very much doubt that mine is the only area where they have used such tactics, so at least I have some anonymity.