UK regulator Ofcom has revealed that it needs more time to consider Openreach's proposed new pricing arrangements for its fibre-to-the-premises (FTTP) wholesale services. The new pricing plan, called Equinox 2, was proposed in December and aims to reduce the price of full-fiber offerings for Internet service provider (ISP) customers, as well as the cost of migrating customers away from copper. It was due to launch in April, but could be delayed by at least two months.
Ofcom said: "In Ofcom's wholesale fixed telecoms market review statement, we set out a framework to promote investment and competition in gigabit networks. In doing so, we recognised concerns that Openreach could set commercial terms that would undermine the construction of new networks." However, when the Equinox 2 plans were proposed, the regulator's provisional view was that no action was required to prevent the introduction of the new terms.
The consultation on Equinox 2 closed on March 4, and Ofcom plans to publish its final decision by the end of March. But it says it has received "a number of detailed and extensive responses to the consultation, some of which raise issues that require further assessment. In order to properly assess these issues, we intend to gather and analyse some additional information. It is unlikely that this will be done before the end of March."
The regulator did reveal that a number of consultation respondents had been approached separately in relation to a recent interview with Philip Jansen, chief executive of Openreach's parent company BT Group, published in the Financial Times on 2 February. In the interview, Jansen is said to have described the company's network as an "unstoppable machine" that would "end in tears" for rival fibre network builders and providers.
Ofcom also published a letter between its chief executive Melanie Dawes and Jansen, in which the latter is seen emphasizing, "I am very disappointed that some of my comments in this article have been taken out of context." He also said he welcomed competition when it came to fiber builds.
Ofcom went on to say in its consultation statement, "We remain fully committed to our network competition strategy and to ensuring a level playing field for all fibre investors at the end of the competition."
UK telecoms industry responds to Ofcom's Openreach decision
In response to Ofcom's statement, an Openreach spokesperson said, "While we continue to agree with Ofcom's initial view that our offer is not anti-competitive, it is important that the regulator has time to consider all the feedback it receives fully and fairly, so our discounted all-fibre prices will not come into effect on 1 April. That said, we do not believe that customers should be forced to pay higher prices as a result of this delay, so if Ofcom's initial assessment is confirmed in May, we will ensure that our customers benefit from Equinox 2 pricing from 1 April. 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 ongoing multi-billion pound investment to upgrade the UK's broadband infrastructure."
Meanwhile, Malcolm Corbett, chief executive of the Independent Network Co-operation Association (INCA), welcomed the news. The association had previously expressed concern about the proposed new pricing analysis for Equinox 2, saying it deliberately threatened competitiveness and made it harder for new entrants to compete in the full-fiber market.
In making its proposal, INCA said it believed that the £20bn investment would be at risk if Ofcom failed to block Equinox 2, which would significantly slow the rollout of full-fibre connectivity broadband across the UK.
Corbet responded to the delayed decision: "We welcome Ofcom's confirmation today that its role is to ensure a level playing field for all investors in full fibre in the UK. INCA and its members have worked hard to provide Ofcom with information and evidence as to why its initial assessment of the BT wholesale discount set out in the Equinox 2 pricing offer was inadequate. We will continue to work with Ofcom in the coming months to help them reach the right conclusions. Fundamentally, they must question why BT Group is increasing the price consumers pay for broadband at the same time as reducing wholesale charges."
Greg Mesch, chief executive of independent network provider CityFibre, took a similar view. Ofcom seems to be taking the industry's concerns seriously," he said. 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 in the long term."
