Broadband infrastructure company Openreach has released plans to offer lower wholesale prices to other internet service providers for access to its fiber network, but the move has seen network rivals raise objections. competition issues.
The company, which is part of the BT Group, has announced plans to offer discounted prices on its fiber broadband products under its Equinox 2 program from April next year, which could lead to lower prices for consumer Internet plans.
But rival companies have already raised concerns about the pricing plan, arguing that Openreach is using its dominant market position to price rivals on infrastructure.
Virgin Media boss Lutz Schuler said it was “vital” that the proposals were “carefully considered” by telecoms regulator Ofcom.
Ofcom has confirmed that it has been informed of Openreach’s proposals.
“We will now consider whether the notified offer raises any competition concerns requiring intervention and reach a preliminary opinion,” the regulator said.
Industry expert and analyst Paolo Pescatore of PP Foresight said Openreach’s decision “will have an impact on the whole market and consumers”.
“Basically, these are the wholesale prices that Openreach can charge providers like Sky, TalkTalk, Vodafone to deliver fiber broadband services,” he said.
“Rival infrastructure providers like Virgin Media O2 and others are concerned that prices are too low, forcing them out of the market.
“In theory, by offering lower wholesale prices, this saving should be passed on to consumers, resulting in cheaper fiber broadband plans. Rivals will feel like Openreach is trying to use its market dominance by locking in providers for longer.
“If so, it will squeeze their own margins, making it harder to roll out their own networks and compete at scale. However, Openreach wants long-term certainty as it is investing in building a fiber broadband network in the UK.
“Ofcom now has a difficult challenge to assess the impact of these new prices and determine whether they will have a negative impact on the market and choice.”
Katie Milligan, Commercial Director of Openreach, said: “We are investing £15 billion to upgrade the UK to super-fast, ultra-reliable Full Fiber broadband and we want more homes and companies are using this new network as soon as we have built . In this way, the whole country will benefit.
“To this end, we have responded to our customers’ desire for lower prices and long-term certainty. These offerings do not commit them exclusively to Openreach but, alongside our new, faster speed tiers, we are confident will help them continue to support and delight their own customers in a highly competitive market.
In a statement issued in response to the Openreach proposals, Virgin Media O2 chief executive Mr Schuler said: ‘BT faces the biggest competitive challenge in its history with billions of pounds of fiber investment flowing into the UK, creating the prospect of genuine wholesale broadband competition. on a large scale for the first time.
“To avoid jeopardizing planned and future investments and to preserve fair competition, it is essential that these wholesale pricing proposals are carefully reviewed to ensure that Openreach does not use its market power and dominance. to lock in providers and deter them from switching to other networks.
“We will make our views clear to Ofcom and the government, who have both made repeated calls for more fiber investment and competition in the UK, and we call on Ofcom to implement its own strategy for a healthy broadband market, as outlined two years ago. in its review of the wholesale fixed telecommunications market.