CityFibre challenges Ofcom ruling on Openreach FTTP pricing

CityFibre wants Ofcom to backtrack on its decision to let Openreach offer lower prices and long lock-in periods for its wholesale FTTP services.

The UK altnet has lodged an appeal against the regulator with the Competition Appeal Tribunal (CAT) in a bid to have it look again at the potential competitive impact of Openreach’s so-called Equinox plan.

To summarise as simply as possible, despite all the legalese in the CAT document, CityFibre is angry that Ofcom essentially dismissed the potential impact on the rest of the market of the Openreach Equinox Offer that came into effect on 1 October. Naturally, it outlines Ofcom’s failure to follow the correct procedure in its analysis of the situation, because those are the grounds on which legal appeals are built, but ultimately it is worried that the pricing plan will hit altnet’s businesses, like its own.

Equinox basically reduces the price of wholesale fibre-to-the-premises (FTTP) products to retail ISPs in exchange for long-term commitments to use the Openreach FTTP network. While this is a good thing for many industry stakeholders, since it potentially reduces prices for consumers and encourages take-up of FTTP, it is a problem for the altnets. Although they lack Openreach’s scale, the alnets can potentially compete on price, but will struggle to win customers if a large number of retail ISPs are locked in to long-term contracts with Openreach.

And early indications are that ISPs are lapping up the Equinox cost-savings, if BT’s latest results presentation is anything to go by.

Commenting on BT’s results for the six months to the end of September, chief executive Philip Jansen noted that Openreach’s three largest customers had already signed up to Equinox, naming Sky and Talk Talk specifically, and said that in total Equinox had attracted 10 retail provider customers. That was just a month after the plan launched.

It is understandable that CityFibre – and possibly other altnets, although it appears to be the only one to have challenged the ruling so far – is upset about this plan, which ultimately could cost it business. It’s also understandable that the regulator would be in favour of a plan that could shift more people onto full fibre more quickly. We’ll see which way the CAT jumps.

CityFibre is asking it to quash the conclusions Ofcom came to when it analysed the market impact of the new tariff structure and force the regulator to carry out a new study, in accordance with the new wholesale fixed market review it published in March. It is also asking for whatever relief the Tribunal sees fit to impose in order for its judgement to have an effect, and costs.

It has asked the CAT to expedite its appeal, but it could be a while before we have an outcome. In the meantime, Openreach is signing up those ISP customers and their end users.