The altnets won at Ofcom, and the channel paid the bill

On 28 September Ofcom directed Openreach to withdraw its Incremental New to Openreach Customer Offer, a wholesale rebate notified on 1 June and due to start on 1 October. It is the only offer in the bundle that Ofcom stopped, using the direction powers it wrote into its Telecoms Access Review 2026–31 (TAR26) in March. Everything else in the same bundle was cleared: the Frontbook ARPU Share and Box Swap offers, the Ethernet Net Demand offer, a wider Equinox footprint and a geographic new-customer offer aimed at Virgin Media O2 (VMO2) areas.

According to Ofcom’s statement, an internet service provider (ISP) whose quarterly fiber-to-the-premises (FTTP) orders ran above a baseline set from its April 2026 volumes would have received a £35 connection rebate and a £9.50 monthly rental rebate on each order above the line, with the rental rebate lasting 18, 24 or 30 months depending on how far above it went. “New to Openreach” meant a line with no Openreach service in the previous 90 days – that is, a customer won from an alternative network (altnet) or from VMO2. Smaller ISPs, with fewer than 1,000 FTTP orders in April, would have had the rebate on every such order with no baseline at all.

Ofcom’s statement says the charges “are not fair and reasonable, because they result in margins that may not allow a reasonably efficient operator to recover its costs”, and that Openreach’s significant market power (SMP) makes it uniquely able to aim a low price at exactly the customers altnets need. CityFibre and nexfibre welcomed the decision, ISPreview reported on 28 September.

I think the altnets have won a fight they may come to regret, and the channel has lost something it wanted. The evidence for both is in the same document.

Read paragraph 2.6 before celebrating

Ofcom is careful to say what it is not doing. Paragraph 2.6 of the statement reads: “This does not mean we are seeking to support increased altnet take-up as a goal in itself, or at any cost; or that we are seeking to guarantee the success or financial sustainability of individual altnet business models.” The regulator will keep an opportunity open for a reasonably efficient altnet, not keep any particular altnet alive. That is a narrower promise than the reaction suggests.

Enders Analysis made the sharper point on 21 September, in a report seen by ISPreview: altnets pushing for the block risk hastening their own deregulation, because the TAR26 framework lets Openreach seek geographic pricing freedom where altnets reach roughly 30% share. Win enough customers and the protection goes. Fail to win them and the protection was not enough. Either way the block bought time, not a business model.

Count the discount the channel lost

The rebate was aimed at the one customer every ISP and reseller on Openreach wants: the one currently paying somebody else. A £9.50 rental rebate over 30 months is £285 off the wholesale cost of a single line, plus £35 at connection. Ofcom’s own analysis says smaller ISPs, with no baseline to hit, may have been better placed than large ones to reflect that in their retail prices. From 1 October, none of it exists.

Whether the money would have reached the wider channel is another matter. The Federation of Communication Services (FCS) told Ofcom that smaller ISPs, MSPs and resellers do not buy from Openreach at all; they buy from BT Wholesale or from an aggregator that does, and nothing obliges BT Wholesale to pass an Openreach offer down the line rather than to BT’s own retail arm. Ofcom’s reply is that it does not regulate BT Wholesale or the aggregators, so passing on any saving is their commercial decision. The rebate the altnets fought to stop was one many resellers might never have seen. That is not a reason to shrug. It is the point: the discount you get depends on your supplier and your negotiation, not on the regulator.

Expect the cheaper offers to keep coming

The block is one decision out of six, and the other five went Openreach’s way. The Frontbook ARPU Share and Box Swap offers have been running since 1 July. The Equinox footprint grows with the build. And in VMO2 areas – around 13 million premises of legacy cable plus about 3 million from Project Lightning, by Ofcom’s description – a £50 connection rebate on new-to-Openreach orders starts on 1 October, cleared because Ofcom judged a discount of that size unlikely to harm long-term competition. Ofcom heard from nexfibre that Openreach releases offers one after another to chill competition. The statement records the complaint, then clears the next one.

James Lowther, managing director, commercial, at Openreach, said in a statement reported by ISPreview that the offer was put forward “in good faith to help our customers compete”. There will be a next offer, shaped to fit what Ofcom has just said it will allow.

Price for the market, not the referee

Channel leaders selling connectivity over somebody else’s fiber should take three things from this. First, stop treating a regulatory outcome as a plan. Ofcom has said in writing that it will not guarantee any altnet’s business model – and it does not regulate the market you buy in, so it is not going to guarantee yours. Second, find out what your wholesaler actually passed through from the five offers that did clear, because that answer sets your cost of sale for the next 12 months more than the block does. Third, price for a market in which Openreach’s wholesale price keeps falling at the edges, a little at a time, with Ofcom’s consent. The altnet you buy from will have to respond or shrink. The aggregator you buy from will have new terms to offer or withhold. Your job is to know both prices before the customer does.

Ofcom has just shown it will referee the wholesale market. Nobody is refereeing yours.