UK regulator Ofcom approved a BT Group plan to offer discounted pricing for fibre on a wholesale basis through Openreach, ruling it did not deem the scheme anti-competitive in a major blow to rivals including VMO2 which had opposed the move.
Following an investigation commenced in December 2022, Ofcom cleared BT’s Equinox 2 scheme to be introduced.
It offers lower prices to retail providers including Sky, TalkTalk and Vodafone UK using its network if they agree to move away from legacy copper systems and adopt fibre.
Ofcom stated its overriding objective was to bring better broadband to people across the UK by promoting competitive investment in high-speed networks and making sure “there’s a level playing field for all companies”.
Equinox 2 faced opposition from smaller so-called alt-nets including CityFibre, which are also laying fibre and backed by private capital.
VMO2 is also pushing its fibre credentials in a race to deploy the technology in areas currently not covered by BT.
However, while Ofcom acknowledged alt-nets are likely to face stronger competition from Openreach as a result of Equinox 2, it did not believe the new pricing structure created “a potential barrier”, adding it is “consistent with network-based competition”.
Paolo Pescatore of PP Foresight believes Ofcom’s decision will be a “bitter pill to swallow” for suppliers like VMO2 and alt-nets, which could argue low prices were “squeezing them out of the market”, and Openreach is using its dominance to lock in providers for longer.
However, Kester Mann, director of consumer and connectivity at CCS Insight, believes it would have been a major surprise if Ofcom had blocked Equinox 2, with “the UK full fibre market firing on all cylinders”.
He also noted the decision will come as a “relief” to French tycoon Patrick Drahi, after it was revealed yesterday (23 May) his investment vehicle Altice UK had upped its stake in BT to 24.5 per cent.