Ofcom orders BT’s Openreach to withdraw discounted new-customer deal

BT’s Openreach has been ordered to withdraw a heavily discounted offer aimed at attracting new full-fibre broadband customers after Ofcom ruled that it was not fair and reasonable.

The “Incremental New to Openreach” offer would have given internet service providers a monthly discount of up to £9.50 per customer for as many as 30 months. Ofcom said the discount could prevent other reasonably efficient operators from matching the offer while recovering their costs.

The regulator also said the offer was aimed exclusively at new customers, potentially limiting alternative network operators’ ability to grow their customer bases. Around half of households with access to full-fibre broadband have yet to sign up, Ofcom said.

“We consider the offer would be unfair and could harm sustainable competition,” Ofcom said, adding that competition was essential for low prices, improved services and UK economic growth.

The decision marks the first time Ofcom has used its powers to stop a commercial offer from Openreach, BT’s wholesale network arm. The regulator said it would not intervene in other Openreach commercial offers that are planned with smaller discounts.

James Lowther, Openreach’s commercial managing director, said the company had proposed the offer “in good faith” to help its customers compete and provide better value to households.

“While we continue to believe the offer would have benefited customers and competition, we’ll review the decision carefully and continue to engage constructively with Ofcom and our customers,” he said. “We’ll launch our other offers and continue to compete fairly.”

Openreach is owned by BT but operates as a separate company. It builds and maintains telecommunications networks across the UK and supplies wholesale services to providers including Sky and Vodafone, rather than selling broadband directly to households and businesses.

The decision comes as alternative network operators, known as altnets, challenge established providers in the wholesale broadband market. Virgin Media welcomed Ofcom’s move but said the regulator could have gone further, while Nexfibre described the decision as a positive step towards protecting competition in the UK fibre market.

Nexfibre also said that Openreach’s use of special offers needed to stop and argued that alternative networks needed incentives to invest, grow and achieve scale. Its comments came as the Competition and Markets Authority investigates Nexfibre’s proposed £2 billion acquisition of rival altnet broadband provider Netomnia in a Phase Two probe.