The blocked offer, known as the "Incremental New to Openreach Customer Offer," was part of a package of pricing changes due to take effect on October 1. Openreach, BT's functionally separate network division and the UK's largest fixed-line infrastructure provider, notified Ofcom of the plans in June.
The rejected scheme would have rewarded internet service providers (ISPs) for connecting more new fiber-to-the-premises (FTTP) customers to Openreach than an agreed baseline. It proposed a £35 connection discount and a monthly reduction of up to £9.50 for as long as 30 months, applying only to customers above each ISP's normal level of new Openreach signups.
Ofcom concluded the charges were "not fair and reasonable" because a reasonably efficient rival might be unable to match them while recovering its costs. The regulator was particularly concerned about alternative network operators (altnets), which need to attract customers to grow and compete with Openreach.
Ofcom allowed other Openreach discounts to proceed. These include a one-off £50 rebate for connections above an ISP's usual number of new Openreach customers in areas served by Virgin Media O2, and a free connection offer for net new Ethernet demand exceeding 90 percent of historical run rate. Ofcom judged the geographically targeted offer unlikely to harm long-term competition, and the Ethernet offer raised no "prima facie concerns."
Reaction to the decision was mixed. Wholesale fiber operator nexfibre called it a positive step but said the regulator could have gone further. "Openreach's tactic of drip-feeding price changes via special offers needs to stop at a time when competition remains nascent," nexfibre said. Virgin Media O2 also welcomed the intervention, though a spokesperson told us: "Although we believe the regulator could have gone further, we welcome Ofcom's move to clip Openreach's wings on its most aggressive offer."
Openreach appeared sanguine. James Lowther, managing director for commercial, said: "We put this offer forward in good faith to help our customers compete and deliver better value for 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."