Ofcom has blocked Openreach's "Incremental New to Openreach Customer Offer", a major pricing scheme designed to incentivize internet service providers (ISPs) to connect more customers to the company's fibre-to-the-premises (FTTP) network. The decision marks the first Openreach commercial offer the regulator has rejected and signals growing scrutiny of the dominant network operator's pricing tactics.

The rejected offer, which was due to take effect on 1 October 2026, would have provided ISPs with a £35 connection discount and monthly reductions of up to £9.50 for as long as 30 months on customers exceeding their agreed baseline signups. Ofcom concluded in its final decision that the charges were "not fair and reasonable" because reasonably efficient rival operators might be unable to match the pricing while recovering their costs.

Why Ofcom Said No

Ofcom provisionally blocked the offer in July following notification from Openreach in June, and has now made that decision permanent after consulting the industry. The regulator's primary concern was the impact on alternative network operators (altnets), which are competing to build customer bases and challenge Openreach's market position.

The watchdog noted that "the scale and targeting of the discount could impede altnets' efforts to build their customer bases," effectively making it harder for rival network builders to achieve the scale necessary to operate sustainably.

Openreach, BT's functionally separate network division and Britain's largest fixed-line infrastructure provider, responded to the ruling. James Lowther, Openreach managing director for commercial, said: "Ofcom's decision not to approve our incremental FTTP new to Openreach offer is in line with their consultation position. We put this offer forward in good faith to help our customers compete and deliver better value for households."

"While we continue to believe the offer would have benefited customers and competition, we'll review the decision carefully and continue to engage constructively with Ofcom and our customers," he added.

What Openreach Can Still Do

Not all of Openreach's proposed pricing changes were rejected. Ofcom allowed other proposed discounts to proceed.

The regulator approved a one-off £50 rebate for connections above an ISP's usual number of new Openreach customers in areas served by Virgin Media O2. Ofcom judged this smaller discount unlikely to harm long-term competition. It said the offer's geographical targeting did not amount to undue discrimination.

A second approved offer provides communications providers with a free connection when net new Ethernet demand exceeds 90 percent of their historical run rate. Ofcom concluded its conditions would not impede the use of rival networks and raised no "prima facie concerns" requiring further investigation.

Industry Reaction: Mixed but Cautiously Welcoming

The decision has drawn cautious support from Openreach's rivals, though some argue the regulator should have gone further.

Wholesale fibre operator nexfibre welcomed the intervention, stating: "Openreach's tactic of drip-feeding price changes via special offers needs to stop at a time when competition remains nascent. Ensuring alternative networks have the incentives to invest, grow and achieve scale will be critical to creating credible, sustainable competition."

Virgin Media O2 also backed the move, despite Ofcom allowing the geographically targeted offer aimed at areas where it operates. A spokesperson said: "Although we believe the regulator could have gone further, we welcome Ofcom's move to clip Openreach's wings on its most aggressive offer and looking ahead it is crucial the dominant incumbent's behaviour is fully kept in check as meaningful wholesale competition emerges."

Significance of the Decision

This is the first Openreach commercial offer Ofcom has rejected. The decision highlights the tension between allowing the dominant operator commercial flexibility and protecting the ability of altnets to compete. Ofcom previously declined to intervene in Openreach discount schemes including Equinox and Equinox 2, which were intended to encourage ISPs to migrate customers from copper to FTTP.