Ofcom: ‘Equinox 2 pricing not anti-competitive’
May 24, 2023
By Colin Mann
UK telecoms regulator Ofcom has published its decision not to prevent digital infrastructure provider Openreach from introducing its new pricing offer for full-fibre broadband, known as ‘Equinox 2’.
Under its rules, Openreach must notify Ofcom of certain offers before they come into effect. This is to allow the regulator to assess them before they are introduced, and where necessary to allow it to intervene to prevent them from being introduced.
On December 14th, 2022, Openreach notified Ofcom of a new pricing offer for its full-fibre services (Equinox 2). This offer gives lower prices to retail providers – such as BT, Sky, TalkTalk and Vodafone – if they agree to use mainly Openreach’s full-fibre products for new orders instead of its legacy copper products.
Having carefully assessed the range of evidence available – including responses to its public consultation – Ofcom has decided not to prevent Equinox 2 from being introduced.
In reaching its view, Ofcom has considered the impact on:
- Citizens and consumers: Ofcom’s conclusion is that Equinox 2 is consistent with promoting investment in gigabit-capable networks by Openreach and other operators and promoting network-based competition, ultimately delivering better consumer outcomes.
- Alternative networks: As a result of Equinox 2, ‘altnets’ are likely to face stronger competition from Openreach. However, Ofcom concludes that the conditional terms in the offer do not create a potential barrier to using altnets. Its conclusion is therefore that Equinox 2 is consistent with network-based competition.
- Internet service providers (ISPs): Ofcom considers that ISPs are likely to benefit from network-based competition. As explained above, it concludes that ISPs will continue to be free to use altnets where they wish to do so.
- Openreach: Ofcom considers that not preventing Openreach from introducing Equinox 2 allows it to engage in network-based competition, without compromising its objective of promoting investment in gigabit-capable networks.
An Ofcom spokesperson said: “Our overriding objective is to bring better broadband to people across the UK, by promoting competitive investment in high-speed networks and making sure there’s a level playing field for all companies.”
“With this in mind, and based on the evidence available to us, we don’t consider Openreach’s new pricing discounts to be anti-competitive.”
Ofcom has also considered the level of prices under Equinox 2, and concerns among some market participants about Openreach’s practice of discussing and developing discounts with retail providers. Having carefully assessed information from providers and altnets, Ofcom does not have concerns that warrant further investigation at this time.
Openreach has informed Ofcom that – in response to concerns raised – it plans to make certain commitments regarding its future conduct, including not having any current plans to change its Equinox 2 rental prices and no intention to initiate further changes until at least March 31st, 2026. This may provide further clarity for altnets and their investors. However, Ofcom has not relied on these commitments in reaching its conclusions.
“This is good news for customers as it means lower prices and long-term certainty – encouraging the switch to faster, more reliable broadband connections,” commented Katie Milligan, Chief Commercial Officer, Openreach. “It’s also good news for the UK, as it supports our continued multi-billion-pound investment in upgrading the country’s broadband infrastructure.”
“We take our legal and regulatory obligations extremely seriously and we’ll continue to compete fairly whilst delivering an unrivalled, nationwide service and choice for customers.”
Malcolm Corbett, CEO of the Independent Networks Co-operative Association (INCA), said: “Whilst we are still reviewing Ofcom’s statement in full, INCA is initially disappointed with Ofcom’s decision. Not only do we believe that this outcome will have a negative impact on competition and investment and ultimately consumers, we also believe that Ofcom’s approach to taking this decision was flawed. This initially seems to be an illogical decision based on a questionable process.
Government policy and regulatory decision making now appear to us to be out of sync when it comes to infrastructure competition. We call on government to clarify its Statement of Strategic Priorities to Ofcom to ensure that the regulator is compelled to put issues of infrastructure competition and investment at the heart of its decision-making process.”
“Ofcom’s approval of Openreach’s Equinox 2 scheme is not surprising, but we question whether this will really lead to consumer benefit or just prove to be a margin boost to the large retail ISP’s using Openreach’s network,” said Tom Williams, CEO and Co-Founder of Lit Fibre.
“Lit Fibre builds its own network and sells services direct to consumers which means we can always provide the best level of service for the best price. Our promise to customers is never to introduce mid-contract price hikes, assuring our customers that they really are getting the best price from the outset.”
“Our focus on a direct-to-consumer model enables us to put the customer first and deliver exceptional quality service and customer support.”