Ofcom pulls the plug on Openreach's aggressive fiber discount

Ofcom has blocked an Openreach discount for bringing customers onto its fiber network, warning that rivals might be unable to match the price and recover their costs. The "Incremental New to Openreach Customer Offer" was one of several pricing changes due to take effect on October 1. It is the first Openreach commercial offer …

[VoiceOfTruth]

competition remains nascent

It has been nascent for years now. That argument is no longer valid.

It's time to say that the whole way Openreach operates is detrimental to the market. It has been 'done wrong" from the start.

[Anonymous Coward]

Re: competition remains nascent

If you want something "done wrong from the start", it's the whole altnet model: Build a duplicate network that can only cover its costs with an unfeasibly high market share, and which ultimately wastes investment that should instead be connecting those properties that are difficult and expensive to connect.

[Paul Crawford]

Re: competition remains nascent

Er no, what is wrong is Openreach acting as a private business oligopoly, often still aligned with BT, and ignoring end user needs. To fix that you either go down to alternative supplier market route, or you nationalise Openreach and force a proper universal service requirement to cover fibre/broadband as well.

If you look at to cost/risk balance most governments will go down the altnet route, even though it is ultimately a waste of resources.

[DS999]

Re: competition remains nascent

I don't live in the UK so I'm not familiar with how things work there, but it sounds like one company lays fiber to people's houses but when customers want to subscribe they have a choice of ISPs that will go over that fiber. To avoid having multiple companies laying fiber?

Here in the US every company does have to lay its own fiber. It took longer to roll out as a result but GPON made it a lot cheaper to deploy so overbuilding is a thing. Yes various providers are sometimes reticent to overbuild in some areas so it tends to be a patchwork and is different in different places but it seems to work.

There is competition anywhere that has FTTH because you have cable companies that were already connected to every house here. That isn't "fiber to the home" since it is coax to the home, but as they are now upgrading to DOCSIS 4.0 which provides for 10 Gbps symmetric who cares. I guess cable TV didn't really catch on there like it did here so you don't have that automatic competition even in places with only one FTTH option.

[phuzz]

Re: competition remains nascent

OpenReach is the remnants of what was British Telecom, the state-run telecoms firm. When it was privatised, and then split off from the rest of the business, Open Reach inherited basically the entire phone network, including all the poles, exchanges etc. which they then rent out to ISPs; so they're both critical infrastructure, and private monopoly.

The UK also has one cable provider (Virgin Media), who cover about half the country (mostly urban areas), and a handful of much smaller companies who've run their own fibre.

So it's kind of a mess, where some urban areas have competition for physical connections and ISPs, and other places just have whatever OpenReach have been bothered to install.

Although, from what I've heard, we're still better off than the US. We don't have anything as fucked up as Comcast here.

[CrazyOldCatMan]

Re: competition remains nascent

I don't live in the UK so I'm not familiar with how things work there, but it sounds like one company lays fiber to people's houses but when customers want to subscribe they have a choice of ISPs that will go over that fiber

Not quite.

At one point, yes, BT Openreach was the only connectivity [1] game in town. But they were required (by law) to:

a) Not be an ISP themselves

b) Offer ISPs 'fair market rates' for the use of BT Openreach connectivity.

So, using me as an example, even in the bad old DSL days, I would order service from an ISP (let's say Demon Internet). Said ISP would then order a line from BT Openreach who would do the requisite connectivity [2]. I would be charged (by the ISP) the connection cost (but not the buildout cost as BT/BT Openreach had already done that, granted by *large* public subsidies) and then charged a monthly cost, a proportion of which the ISP would then pay to BTO for the raw connectivity.

The same originally applied to FTTC and FTTP - Bt Openreach were the only people with the mass reach and ISPs had to use them to offer FTTC or FTTP. Which meant lots of ISPs with very little price differentiation other than things like user contention (if you wanted less people to share your DSLAM at the local exchange, you had to go for a higher-cost solution). They were also constrained by what BTO would offer - so no true GB Internet, no high-speed symmetrical lines (my last BTO-supplied line was 900/11mb)

Then along came people like CityFibre who had the backing (mostly vulture capital) to do their own fibre infrastructure. So, a couple of years ago, the town I live in went through a (mostly) full fibre fit-out from CityFibre, including my road. Ironically, they were able to re-use the BTO fibre ducting as it's counted as a public conduit since it was (largely) paid for by Government grants.

Which meant my ISP (I'd *long* since moved on from Demon) were able to offer me an upgrade to 900/900 at low contention for £20 less than I was paying for the 900/100 from them because the CityFibre circuit prices were lower than BTO. I did have to give up my analogue landline and move over to VOIP but, since we're planning on getting rid of that line anyway, no big deal.

As to cable TV - we had a limited channel cable setup in the early-mid 1990s. When satellite TV became available we switched over to that (gave us many, many more channels at a similar price). Our broadband was always separate. You can get DOCSIS-based stuff still (Vermin Media?) but FTTP is getting much cheaper and more available everywhere in the towns and cities. The rural areas are a little more patchy though.

[Annihilator]

Re: competition remains nascent

Well there's the mad thing. I live very rurally, and have had gigaclear for about 5 years now. It's literally the only option where I am (Starlink aside), as BT only offer around 1Mb over DSL.

BT are now rolling out fibre to my location which seems slightly mad. However, it's absolutely needed, as Gigaclear are an absolute monopoly for me now. If the altnets had been set up in a similar fashion to Openreach, others could resell on top of it.

Starlink are the only thing that let me renegotiate when renewal comes up (and the price inevitably rises to £60+)

[DS999]

Re: competition remains nascent

It is amazing how prices have dropped through the floor where I live. In the last few years a fiber provider has covered most of town (and another one covers much of the rest plus some overbuild) so there was some much needed competition for our local cable company.

Recently though the price wars have gone into hyperdrive because the cable company is in the process of retiring video (i.e.QAM channels, which unfortunately rendered my beloved Tivo a paperweight) across town, working to light up DOCSIS 4.0 and go from 1 Gbps / 40 Mbps as their top tier to 5 Gbps symmetric as their new top tier. So now my fiber provider that tops out at 1 Gbps is seen as "behind" so they are getting really aggressive on pricing. They've been doing work around town so I'm guessing they are going to be offering higher speeds soon.

Too bad we sat still with a choice between 80 Mbps VDSL2 and 100 and later 300 Mbps cable, both for around $100, for around 15 years! Thank whoever created GPON, that really has dropped the price for fiber deployments and made even overbuilds practical and cost effective (though maybe not at the new lower price war prices, I'm curious if they halt the overbuilds)

[Tony Carter-Inman]

"FIBER"...since when?

When did the UK English spelling become 'fiber'?

I don't want any of the foreign shit coming into my house ;)

[captain veg]

Re: "FIBER"...since when?

There isn't really any UK English. Lallans is definitely something else and Welsh and (Norn-) Irish variants are quite easily distinguishable,

I think you mean English English. Also known as English. You know, the language spoken by the English.

-A.

[phuzz]

Re: "FIBER"...since when?

Since elReg realised that the majority of their readership are USians I guess. They switched to mostly US English a few years ago.

[Annihilator]

Re: "FIBER"...since when?

I'm sure you can insist that your fibre was forged in the mills at Port Talbot, don't worry ;-)

[Anonymous Coward]

It's not as if BT doesn't have previous Phorm in screwing people over, is it?

[AndrueC]

a) There was no financial element to PHORM so it's a completely different thing.

b) OFCOM is in effect preventing Openreach from reducing the cost of residential broadband(*).

c) That was a different subsidiary so nothing to do with Openreach.

d) PHORM was a long time ago - at least in web/internet terms. Different times, different ideas.

(*)Assuming that ISPs would pass the discount onto customers and in the short term at least. I still think that duplicating the physical network across the UK has been wasteful and misused such funds and resources as were available but I also think that competition is a good thing so long term OFCOM's decision is probably the right one.

[David Pearce]

A similar situation in Malaysia, with the privatised former state monopoly competing with two commercial fibre networks. A horrible duplication of resources and getting rural access is always a challenge, although there is a levy on operators to subsidise rural installation..

[Lee D]

I don't understand the race to the bottom anyway.

In the last 10 years, I've lived in two different places. In the middle of a large town inside the M25 that you've definitely heard of, a stone's throw from the city centre.

BT/Openreach (not going to pretend they aren't still in bed together) wanted £160 to activate a landline, on the promise of 4 (FOUR) Mbps down, 1Mbps up, for the standard DSL pricing (~£25 a month at the time). Feck. Right. Off.

I used 4G for many years rather than touch that. There were no landline rivals - everything was BT-based, and there was no "altnet" or even something like Virgin Media available in the entire street. That was the choice... so I chose wisely and told them to stuff it and used a 4G hotspot (and got a good, consistent 35+Mbps with unlimited data).

I then moved into a nice rural house nearer Oxfordshire. Now I get that Internet might well not be great out there. I understood that when I bought the house.

Again, BT/Openreach (and their myriad resellers, which is all most ISPs are) could only promise me 35Mbps. A few years later, my contract expired through their reseller and I switched. And the new reseller was a bit more diligent and pointed out that I should be getting more than that. They provided me with a "promise" of 75Mbps. I switched. They couldn't attain 75Mbps. They sent out an engineer (presumably Openreach). They discovered that the landline had been sitting in a flooded underground duct for, probably, a decade or more. They rescued it, re-ran it. I got my 75Mbps. That was a couple of years ago.

I balanced that connection with a 5G connection because, again, it was superior. And again - no altnets, no rivals, no Virgin Media, no nothing.

Then Gigaclear announced that they were coming to my area. I'd been on their waitlist since they joined a nearby village to their network, so I was one of the first to hear. It took a LONG time, maybe 18 months from the announcement, before they were offering service, and I attended several of their events to ask questions about it and how independent it was, etc. They dug up the roads and they had fibre going back all the way to the local town's exchange (which all fibre does in some capacity, it's just who owns that particular fibre / rack).

And earlier this year, I was their first resident in my village to order and get 900Mbps FTTP. The order was put in day one of availability. They sent out a guy (not Openreach) the next day who looped the local telegraph pole into the fibre cabinet back on the main road, attached it to my house, and coiled it up ready for install. I got an offer of when I wanted my actual connection appointment, they arrived that day, run the cable where I wanted, put it into the house, a literal fibre into the house with just a fibre converter as the actual connection (I boxed up the two promotional Eero units and have no intention of ever using them, and instead just plugged it into the same router that I've had for years).

Instant, 900Mbps, seamless, full-on, no-shirking, low-ping fibre. For a promotional price for the first two years.

I then phoned up the BT-based ISP and told them where to go. They asked why I was leaving. I told them - an alternative provider walked in and did what you haven't bothered to do in all the time I've lived here, and it's their own fibre and network, so I will use them. They had literally no alternative to offer, not even reselling that same fibre some other way. They just closed the account.

The FTTP has been perfect and great. No problems. Great, and consistent, speeds at the absolute max promised, low-latency, constantly, 24 hours a day, from rural Oxfordshire.

I'm sorry, but why on earth would I want to give BT/Openreach money other than where absolutely necessary? I'd literally rather pay someone who's going to do the job and offer the product and service I need. I don't need the cheapest ISP. I don't need special deals. I'm not going to go with TalkTalk "just because they're cheaper". It's nonsense. What I want - is SERVICE.

And BT/Openreach can't offer that.

Additionally, an anecdote from work:

Started a new job. Workplace has been promised/waiting for THREE YEARS that BT would give them a leased line to their semi-rural location. Nothing. Every 6 months they would complain, a BT/Openreach engineer would turn up on site, put a bit of EMPTY tubing somewhere along the intended path across the site, leave to "do something at the exchange" and not come back. They dragged their feet for another 18 months with me managing that same project, so I gave up on them entirely. When you do any kind of "what networks can service this area" check, you get nothing. It all came back to BT/Openreach and nothing else. The workplace had been trying for years to get anything else they could.

Then I contacted Virgin on a whim. They said "Well, actually... there's a millionaire who lives near you. And we ran a fibre just for him, that's of the right grade. There's no reason you can't piggyback another fibre from his fibre connection points and you'd get leased-line promises on that." So we did it. We dug up a farm field to help them lay the fibre. They connected us to just outside this millionaire's house.

And then BTO SWAMPED us. Suddenly, they COULD provide the leased line. They would book engineers to turn up at our (secure) site, unannounced. We found them working overhead when we hadn't authorised stuff like that. They wanted to "finish off" the leased line install that they'd let linger for half a decade. Because, we know, the postcode checkers etc. told them that they had no rival in that area, so they just didn't care. They thought they had a monopoly and no competition. And the second they found out that wasn't the case, they were all over us all of a sudden, giving us the service they never gave us previously.

We told them where to go, cancelled the order, banned them from site. One of the engineers also confided in me - they'd scrambled to put the connection back from our site to the exchange and in the process found out... there was no capacity capable of our requested connection at that exchange either. There was no way they could ever have delivered on what they'd promised 5 years earlier. So they'd just been stringing us along.

3 months after I asked Virgin, we had a leased line from them that has now been in place for over 10 years, flawlessly. That site still has, in half a dozen underground ducts, and near the IT office, and on the local telegraph poles, sections of empty BT tubing for blown fibre, etc. all over. None of it the same. None of it joined.

BT/Openreach can feck right off. They can offer whatever deal they want. They can undercut whoever they want. Because their service? Absolutely sucks.

I will literally pay more NOT to have BTO involved. As I have said to several leased-line providers in my professional capacity since all that.

[Annihilator]

"I then phoned up the BT-based ISP and told them where to go. They asked why I was leaving. I told them - an alternative provider walked in and did what you haven't bothered to do in all the time I've lived here, and it's their own fibre and network, so I will use them. "

You say the BT-based ISP didn't bother, that's not exactly on them, is it? It's on Openreach's roll-out plans, which didn't include you (and so fell to the altnet to provide, which I'm guessing the government part-funded), primarily because they were already meeting the USO (10Mb).

I'm in exactly the same position (except wasn't anywhere near 75Mb from BT). What I will say is that while Gigaclear is absolutely great, the outage support isn't brilliant. And wait til your minimum term expires, you'll quickly find out that they're essentially even more of a monopoly than Openreach, as all the resellers can't use them. You'll basically need to fully commit (or pretend to) leaving. I pretended I was willing to survive on Starlink out of principle, and return as a new customer (with a suspiciously similar name) before they'd give me the new customer deals.

[Archivist]

Starlink

I live in a town area without fibre. We have an aged Virgin media cable network that works very well. However Virgin has refused further discounts - that we have to beg for each year. Thus the lowest monthly price for just internet is now £50. The only alternative for 100Mb/s is Starlink at £40/month. This is a crazy situation, but I've signed up.