Ofcom extends time on BT wholesale broadband tariff probe

After receiving detailed and extensive responses to its preliminary indication that it would not intervene to prevent BT broadband division Openreach from introducing new wholesale pricing arrangements for its full-fibre services, known as the Equinox 2 offer, UK communications regulator Ofcom has extended by two months its work into reaching a final decision on the issue.

Openreach first notified Ofcom of its intention to adopt a new framework for wholesale pricing on its network on 14 December 2022. In February 2023, Ofcom said 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 was that it should not 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 businesses across the UK.

However, the preliminary decision was criticised by a number of BT’s rivals. 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 its own analysis of Equinox 2 found the scheme deliberately threatened competitiveness and would make it harder for new entrants to compete in the full-fibre market.

“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”

The Equinox 2 offer was originally due to launch on 1 April 2023, with Ofcom planning to publish its final decision in light of its consultation by the end of March 2023. Yet the regulator has now revealed that it has received a number of detailed and extensive responses to the consultation, some of which it said raised issues that require further assessment.

To assess these issues properly, Ofcom intends to gather and analyse some additional information, a process it acknowledged would not be possible before the end of March. Moreover, it emphasised that to provide certainty and stability for industry, its view was that it would be appropriate for the offer not to launch until it issued a final decision.

Addressing industry concerns regarding an interview given by BT Group chief executive Philip Jansen to the Financial Times on 2 February 2023, Ofcom stressed it remained fully committed to its strategy of network competition and ensuring a level playing field for all fibre investors as that competition plays out.

Following Ofcom’s decision to extend its review of Openreach’s Equinox 2 discount pricing scheme, Greg Mesch, CEO of Openreach rival CityFibre, said: “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.”