Approval of BT price cuts to anger other fibre providers

OFCOM is poised to wave through BT’S wholesale price cuts despite claims they will strangle broadband competition.

Industry sources said the regulator was minded to approve the new price plan, dubbed Equinox 2, which will reduce the fees paid by providers such as Talktalk and Sky.

However, Ofcom is expected to introduce new rules on how Openreach, BT’S network division, can discuss future discounts with its customers.

The watchdog is also tipped to set out new oversight measures on any future price reductions that might impact competition. The decision, expected later this month, is likely to spark anger among smaller broadband providers.

Alt nets including Cityfibre have accused BT of trying to undercut them by locking customers into longer deals. Investors have complained to Ofcom about a lack of transparency and warned the plans put £20bn of investment in full-fibre broadband at risk.

Mark Shurmer, head of regulatory affairs at Openreach, has previously said that its prices “will continue to enable fair competition alongside our unprecedented investment”.

Malcolm Corbett, chief executive of alt-net lobby group INCA, said BT’S price cuts would have a “damaging impact on the market”. He added: “Government policy support for infrastructure competition has led to investment commitments that make the full fibre programme the second largest infrastructure project in the UK, after HS2.

“Ofcom puts this investment at risk if it regulates against emerging competition by allowing Equinox 2 to proceed.”

Ofcom announced its provisional decision to approve Equinox 2 this year, but ordered BT to delay the price cuts in the wake of comments by Philip Jansen, the chief executive. Mr Jansen described his company’s network as an “unstoppable machine” and said the UK’S high-speed broadband push would “end in tears” for many rivals.

As a result, Ofcom said it was extending its investigation by two months over fears BT could “distort competition in the market”.

James Fredrickson, policy director at alt-net Hyperoptic, said BT’S price cuts were an “inevitable” response to competition. He added: “We believe that the Equinox 2 discounts don’t undermine competition, but Ofcom must be alive to the risk presented by any further reductions sought by Openreach.”

Ofcom said: “We’re assessing Openreach’s Equinox 2 discount offer and will announce our decision by the end of the month on whether or not we will intervene.”