Openreach eyes further fibre discounts after Ofcom blocks price cut
Openreach is considering further targeted fibre discounts over the next five years after Ofcom blocked its most aggressive attempt to cut wholesale prices, the BT-owned network told City AM.
The broadband giant said it remained open to competition in different parts of the country after the regulator approved a separate £50 rebate for new full-fibre customers in areas covered by Virgin Media O2.
“We would expect to launch further offers over the five-year period of the TAR framework”, an Openreach spokesperson told City AM.
The Telecoms Access Review (TAR) is Ofcom’s regulatory framework for the UK’s fixed telecoms market from April 2026 to March 2031.
It sets the rules governing areas including Openreach’s wholesale pricing as Ofcom seeks to balance lower prices with investment and competition from rival fibre networks.
“Ofcom have designed the TAR framework to be flexible as competition develops, and so an offer that isn’t approved now may be possible within the TAR period”, Openreach said.
The comments suggest Openreach could return with further discounts as competition develops between Britain’s largest broadband network and rivals including Virgin Media O2 and Cityfibre.
Ofcom ordered Openreach to withdraw its ‘Incremental new to Openreach customer offer’, which would have offered broadband providers a £35 connection rebate and discounts of up to £9.50 per customer a month.
The regulator concluded the offer was not “fair and responsible”, arguing rival networks may be unable to match the prices while recovering their costs.
Ofcom raised concerns about the proposal under the new TAR rules back in July.
But it cleared Openreach’s other proposals, including the £50 rebate in VMO2 areas, leaving scope for more geographically targeted competition.
How low could Openreach go?
Enders Analysis has estimated Openreach’s underlying full-fibre costs at around £13 to £14 per customer a month, significantly below its estimated average fibre revenue of about £19.
A spokesperson told City AM that while they “can’t confirm the specific level of true fibre costs, Openreach have built efficiently at a low cost, and want to be able to pass the benefits of this to end customers”.
Ofcom currently assess Openreach’s discounts partly against the estimated economics of a hypothetical “reasonable efficient” rival network.
Enders estimates that benchmark at around £17.41 a month, leaving Openreach relatively little room to cut its average prices nationally.
But the analyst argued that restriction could prove temporary as competing networks become more established.
Ofcom allowed Openreach’s £50 rebate in VMO2’s footprint, after concluding the smaller discount was unlikely to harm long term competition.
Openreach does not sell broadband directly to households, meaning there is not guarantee wholesale discounts translate directly to cheaper bills.
“It’s up to CPs to decide exactly how they use the offers, but the clear aim is to strengthen their ability to compete on value and service”, Openreach said.
“In a more competitive market, that should help create better deals and make fibre more attractive for households and businesses”.
Alex Tofts, strategist at Broadband Genie, said Ofcom now faced a balancing act between protecting emerging fibre networks whilst keeping prices low.
“The key challenge is now ensuring this intervention doesn’t inadvertently drive up bills during a cost of living squeeze”, he said.
Openreach has built full fibre past 23.5m premises as BT approached the end of its £15bn rollout to reach 25m by December, with an ambition to cover up to 30m by 2030.