Ofcom Blocks Openreach Fibre Discount as Altnet Margins Come Under Scrutiny

Ofcom’s first block on an Openreach commercial offer puts BT’s network arm on notice that full-fibre discounts aimed at still-unconverted homes will face tighter scrutiny, Capacity Media reported.

The rejected promotion was designed for internet service providers bringing new fibre customers onto Openreach infrastructure.

It paired an upfront £35 rebate with a £9.50 monthly discount for customers outside the network’s existing base, with the recurring discount lasting 18, 24 or 30 months depending on how far a provider beat its assigned volume threshold.

Openreach had planned to begin the offer on 1 October.

In a final decision dated 28 September, Ofcom concluded that the pricing package failed its fairness test because a similarly efficient competitor might not retain enough margin to cover costs.

Market power sat at the center of that finding.

A price cut available only for new Openreach fibre additions could have helped the incumbent pursue the same households that alternative fibre builders need to turn coverage into scale, while the rest of Openreach’s customer base would not have received the same price movement.

The window for that customer fight remains large.

Ofcom pointed to the fact that roughly half of UK premises already passed by full fibre have not yet taken the service, leaving operators competing for first-time fibre sign-ups rather than only switching existing users.

The intervention was limited rather than a broad ban on Openreach discounts.

Ofcom allowed several other notified offers, including two live from 1 July, a business ethernet proposal and an expansion tied to Equinox pricing.

A separate version of the new-customer discount for Virgin Media O2 territory also passed because the regulator judged the competition risk too weak on that record.

Openreach said the outcome followed the direction Ofcom had set during consultation and that it would examine the decision.

James Lowther, managing director for commercial, described the proposal as made in good faith and confirmed plans to move ahead with the other approved discounts, including fibre pricing in the VMO2 footprint and an ethernet business offer.

The decision marks a firmer stance than Ofcom took on earlier Openreach pricing rounds.

Equinox, Equinox 2 and a proactive fibre-upgrade offer all moved forward after objections from alternative networks, making this ruling a clearer limit on targeted wholesale incentives.

Rivals are treating the order as part of a wider argument over the shape of UK fibre competition. nexfibre, the wholesale network backed by InfraVia, Liberty Global and Telefónica, welcomed the step but argued that Openreach should not be able to keep changing prices through serial special offers while challenger networks are still maturing.

That same response also supported nexfibre’s proposed £2 billion purchase of Substantial Group, whose brands include Netomnia, YouFibre and Brsk.

The enlarged business would reach about 8 million full-fibre premises by the end of 2027, counting roughly 2.1 million upgraded VMO2 premises.

The Competition and Markets Authority moved the transaction into a detailed Phase 2 review on 1 July after an initial assessment and a fast-track request from the parties.

Opposition inside the altnet sector remains visible: CityFibre chief executive Simon Holden has cited 80% overlap between the two networks and warned that the deal could recreate a market dominated by BT and VMO2.

One pricing tool has now been taken away from Openreach as the race for remaining fibre customers continues.

The CMA’s ruling on nexfibre and Netomnia will determine whether one of the challengers in that race gains enough scale to change the balance Ofcom is trying to protect.