Openreach has announced new fiber-to-the-premises (FTTP) wholesale pricing that offers Internet Service Providers (ISPs) more discounts to encourage consumer migration to fiber broadband connections.
However, it has already faced criticism from other network operators who believe the company is using its position as a dominant player to undercut them.
Openreach announced that it has submitted its new FTTP wholesale offering, Equinox 2, for review by UK telecoms regulator Ofcom. The original proposal went into effect last October and offered ISPs incentives for the next 10 years to encourage them to roll out new subscribers to fiber broadband instead of a legacy copper connection, as part of an effort to attract more customers to fast broadband .
The infrastructure arm of British telecom giant BT, Openreach provides a nationwide network platform for ISPs including Sky, TalkTalk, Vodafone and BT itself. The company said it developed Equinox 2 in response to feedback from those customers, describing it as an optional overlay to the original Equinox offering .
In its proposals, Openreach said it would offer further incentives to help ISPs migrate their retail customer base to FTTP. This includes a mix of incentives to encourage the use of higher bandwidths, with additional benefits dependent on the existing ‘fiber only’ policy seen in the original Equinox. The new prices are scheduled to come into effect on April 1, 2023.
Katie Milligan, Openreach’s chief commercial officer, said in a statement that the company is investing £15billion to upgrade more UK users to full-fiber broadband and that Equinox 2 is helping to achieve that.
“To that end, we have responded to our customers’ requests for lower prices and long-term security. These offerings do not exclusively commit them to Openreach, but alongside our new, faster speed tiers, we are confident that they will help them continue to support and delight their own customers in a highly competitive market,” she said.
However, an alternative network provider (altnet) challenged the original Equinox offering. CityFibre claimed it would give Openreach an unfair advantage in attracting new customers as the rebates would discourage ISPs from using altnets when signing up new subscribers for fiber connections.
It lost an appeal to the Competition Appeal Tribunal (CAT) earlier this year against Ofcom’s decision to allow Equinox the trial, with the ruling finding CityFibre was unable to show it had suffered harm.
The company is equally critical of the updated offering, with CEO Greg Mesch saying in a statement: “BT Openreach exhibits a range of behaviors that are straight out of the playbook of a dominant operator using its market power and advantages to maintain its dominance .”
Equinox is just one of those levers, he claimed, describing it as a pricing policy designed to retain customers and prevent them from switching to cheaper, more reliable competitors.
This is because in order for an ISP to qualify for a rebate, they must receive a certain percentage of their new signups on Openreach fiber, which could discourage ISPs from considering fiber from altnets operating in the same area.
Lutz Schüler, CEO of Virgin Media O2, said in a statement The registry that it is crucial that the new wholesale pricing proposals are thoroughly scrutinized to ensure that Openreach does not use its market power to lock in vendors and discourage them from switching to other networks.
“We will make our views clear to Ofcom and the Government, who have both repeatedly called for more fiber investment and competition in the UK, and we call for Ofcom to implement its own strategy for a healthy broadband market, as set out two years ago in its Wholesale Fixed Telecoms Market Review,” said Schüler.
Telecoms analyst Paolo Pescatore of PP Foresight agreed that rival infrastructure providers such as Virgin Media O2 have concerns that Equinix 2’s discounted prices are too low and potentially forcing them out of the market.
“Competitors will feel that Openreach is trying to capitalize on its market dominance by retaining vendors longer. If they do, it will squeeze their own margins, making it harder to build their own networks and compete at scale,” he said.
Ofcom now faces the difficult challenge of assessing the impact of these new prices and whether they will negatively impact market decisions, Pescatore added. He warned that there are “too many players under the pounds” in the broadband market and that given the scale of the rollout, consolidation is inevitable.
“A more sensible approach should be taken to ensure UK plc benefits from fiber broadband,” he said.
Last month, Openreach said it would prioritize investments in areas where it has already started rolling out fiber networks, rather than starting construction of new areas, as the company tries to keep costs down amid rising inflation and other stresses . ®
https://www.theregister.com/2022/12/19/openreach_offers_more_fiber_discounts/ Openreach updates Equinox fiber pricing incentives for ISPs • The Register