March 20, 2023
Ofcom has announced it will delay publishing its final decision on Openreach’s Equinox 2 FTTP offer by a further 2 months.
Openreach published its Equinox 2 FTTP offer in December last year, building on the previous Equinox 1 FTTP offer, with further discounts to its rental prices including for the first time (controversially) pricing below the regulated 40/10 Mbit/s product (here).
Ofcom issued a consultation on the matter last month where it provisionally concluded the offer was not a material risk to competition and thus did not require regulatory intervention (here). The consultation closed on the 4th March 2023 with Ofcom (before this announcement) expected to release its final decision on the issue later this month, likely in time for the launch date Openreach had set for the 1st April 2023.
Ofcom has now delayed its final decision for a further two months in light of the “detailed and extensive responses to the consultation, some of which raises issues that require further assessment”. This sets a provisional deadline for Ofcom’s decision to now be late May/early June 2023.
Ofcom has now also asked Openreach to voluntarily defer the offer until it can reach a decision on the issue. Were Openreach not to do so voluntarily, Ofcom does state it can and would use its powers under s.49 of the Communications Act 2003 to force Openreach to do so.
The competitive alternative network providers (‘altnets’) are likely to welcome the news, as at best it means Ofcom is taking their competition concerns seriously enough to review and potentially renege on what appeared to be a pre-determined conclusion to allow the offer through.
Ofcom has sought to double-down on its commitment to competition today by also publishing letters exchanged between its CEO Melanie Dawes and BT Group CEO Philip Jansen, on the back of comments the latter was reported as making. In the letter to Phillip Jansen, Melanie clearly states “were it to become apparent that BT is able to nonetheless distort competition in the market, we would not hesitate to take regulatory action to address this.”
The ISPs will be concerned by this move leaving them in a period of uncertainty, during which time they are facing rising costs and increasing public and regulatory pressure regarding their inflation linked retail price increases.
That all being said, this delay should not be interpreted as a foregone conclusion Ofcom will necessarily intervene – or at least to the extent which altnets may consider satisfactory to protect competition. It also does not mean Ofcom’s decision will be the end of the matter, with parties on both sides of the divide likely to legally appeal an unfavourable decision.
This may be indeed what Ofcom is considering when looking to delay its decision. In its appeal of Ofcom’s decision on Equinox 1, CityFibre argued on multiple grounds that Ofcom had failed in its process to adequately assess Equinox 1 (i.e. how it arrived at its decision to approve the discount). CityFibre would go onto lose the appeal but not without the court concluding “we would encourage Ofcom to maintain careful scrutiny of the market at this important time, to ensure that the judgements it has made in the Statement continue to be validated by the emerging evidence of actual competitive conditions”.
Ofcom will now likely be bilaterally engaging with stakeholders on this issue for the next few months, BT Group, ISPs and altnets alike. This may come in the form of formal group meetings or (more likely) through the issuance of information requests.
Operators, ISPs and altnets alike, will need to engage with Ofcom these next two months to ensure their concerns are being heard. This delay is a signal Ofcom is listening.
If you need help in engaging with Ofcom on this and/or wish to know more and discuss this further please get in touch.