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Sunday, October 24, 2021

Ofcom approves Openreach fibre price cuts, angering rivals


Independent broadband network providers have criticised Ofcom for accepting Openreach’s reduction in fibre-to-the-premises (FTTP) broadband costs.

According to Openreach, its “Equinox” offer means that Internet service providers (ISPs) will pay less for FTTP.

Companies that use Openreach’s fibre, such as Sky, were generally pleased with the agreement.

Competitors, however, claim that it will reduce investment in alternative FTTP schemes and harm competition.

The Equinox offer, which starts today, means that ISPs like TalkTalk or Sky will receive a discount in exchange for making FTTP broadband their default option for customers where it is available.

Ofcom had conducted a consultation on the offer but concluded that it did not raise competition concerns at this time.

“Our decision means people will benefit from investment in faster networks,” Ofcom told the BBC. All businesses, including Openreach, should be allowed to innovate.

“We carefully considered this offer and the views of competitors and concluded that it does not raise concerns that necessitate intervention and is consistent with network competition.”

Alternative fibre

However, so-called alt-nets – independent broadband network providers – argue that the Equinox offer is harmful to competition.

The Independent Networks Co-operatives Association (INCA), which represents a large number of alternative networks, accused Openreach of “using its market power to reinforce its dominant position.”

According to Openreach, it was simply attempting to persuade ISPs to migrate to its fibre networks.

The INCA told the BBC that Equinox would result in “a reduction in wholesale competition, which will inevitably result in higher prices and lower standards of service for consumers in the long run.”

INCA CEO Malcolm Corbett stated that it could also cause “delays in fibre deployment, particularly in rural and difficult-to-reach locations.”

Gigaclear, an independent firm that operates a full fibre broadband network in rural areas across central and southern England, expressed “extreme disappointment” with Ofcom’s decision.

However, Openreach stated that the agreement was “great news for homes and businesses across the UK.”

“Our new wholesale pricing gives ISPs more long-term certainty, enables them to compete in a highly competitive market, and makes ultrafast full fibre technology the default choice wherever it’s available,” said the company’s Mark Shurmer.

Balancing act

According to Matthew Howett, an industry analyst and founder of research firm Assembly, some degree of consolidation in the industry now appears certain.

“If that results in providing stability and scale to those alt-nets in their competitive battle with the larger incumbents, that can’t be a bad thing for consumers,” he says.

“A competitive fibre rollout is arguably Ofcom’s flagship policy, so any early indications that the Equinox offer is having a negative impact on consumers would seem to warrant intervention. It’s like a pair of precariously balanced scales – we’ll have to wait and see where they settle.”

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