Openreach commercial offers: what Ofcom proposes, and the three tests it applied
In short: Ofcom has consulted on the six Openreach commercial offers notified on 1 June 2026. It proposes to allow five and to direct Openreach to withdraw one, the Incremental New to Openreach Customer Offer. Three tests applied, producing seventeen assessments and a single adverse finding: that one offer’s charges are not fair and reasonable. This is a consultation, not a final decision. It closes on 27 August 2026, Ofcom expects to decide by the end of September, and the offers are notified to take effect on 1 October 2026.
Ofcom has proposed to direct Openreach to withdraw one of the full-fibre pricing offers Openreach notified on 1 June 2026. The Ofcom consultation on Openreach commercial offers, published on 28 July 2026, is the first occasion on which Ofcom has proposed to intervene against an Openreach offer of this kind. It declined to intervene on Equinox 1 in 2021, on Equinox 2 in 2023, and on the proactive upgrades offer in October 2025. Openreach commercial offers are regulated because Ofcom has found that BT holds significant market power in relevant markets, and has imposed SMP access conditions under section 87 of the Communications Act 2003.
The result is narrower than the headline suggests. Five of the six Openreach commercial offers are cleared on every test that applies to them, and the sixth cleared two tests and failed one.
The six Openreach commercial offers
Frontbook ARPU share offer, ACCN OR1106
Openreach charges a retail provider a monthly rental on every full-fibre line that provider sells. Under this offer Openreach gives part of that rental back, but only on the lines the provider has recently won. The test is the average monthly revenue Openreach earns across those newly won lines, which the industry calls frontbook average revenue per user. Openreach sets the threshold at £19.32 a month for the first year, rising each year by inflation less 1.25 per cent and never falling. Where a provider’s frontbook average sits above that threshold, Openreach pays back the whole of the average revenue on eligible volumes. Frontbook counts a broad set of orders: connections at premises new to the Openreach network, customers won from a rival, migrations from another provider, extra lines at an address already connected, migrations within the same provider, and upgrades to a faster speed. The offer is nationwide and open from 1 July 2026 to 30 June 2027, and the prices it sets hold until 30 June 2029, so a provider that wins a customer on the opening day keeps the benefit for 36 months and one that wins a customer on the closing day keeps it for 24. Because the threshold is an average, the way to clear it is to sell faster and dearer products rather than to buy more lines.
Box Swap offer, ACCN OR1107
A customer moving up to Openreach’s 1.8Gbit/s full-fibre product needs faster equipment at the premises, a 2.5G optical network terminal, which is the unit that converts the fibre signal for the customer’s router. Openreach normally charges £90 to supply and fit it. Under this offer Openreach provides it free on any upgrade to 1.8G, with no volume or revenue condition attached, so a provider qualifies whatever else it buys. The offer is nationwide and open from 1 July 2026 to 30 June 2027. Ofcom treats the free unit as a £90 discount on connections at and above 1.8G and assumes around 11 per cent of customers will qualify, which is how the offer enters its pricing calculations. What the offer does commercially is remove the upfront cost that would otherwise discourage a provider from moving an existing customer onto a faster and dearer product.
Incremental New to Openreach Customer Offer, ACCN OR1108
This is the offer Ofcom proposes to stop. It rewards a retail provider for connecting more customers to the Openreach network than it was already connecting, and it pays nothing on the business the provider would have brought anyway. Openreach gives each provider a quarterly target, worked out from the number of qualifying orders that provider placed in April 2026, then adjusted for growth in the Openreach footprint and for the time of year. Qualifying orders are premises new to the Openreach network, meaning no Openreach service has been supplied on that line for at least 90 days, together with additional lines ordered at a premises already connected, which Openreach calls a subsequent provide. Orders up to the target earn nothing at all. Every order above it earns £35 off the one-off connection charge and £9.50 a month off the rental. How long that monthly discount lasts depends on how far past target the provider goes: 18 months on the orders up to 5 per cent above target, 24 months on those between 5 and 10 per cent above, and 30 months on everything beyond 10 per cent. The offer is national, runs for six months from 1 October 2026, and can be extended to a full year on the same terms.
Small providers are treated as a special case. A provider that placed fewer than 1,000 qualifying orders in April 2026 gets no target at all and takes the £35 on every order it places, with the monthly discount running 18 months on the first 5 per cent of its volumes, 24 months on the next 5 per cent and 30 months on the remaining 90 per cent. The design is what makes the offer contentious. Because the discount attaches only to orders above target, it reaches the marginal order, and the marginal order is precisely the one an alternative network would otherwise be bidding for.
Geographic Incremental New to Openreach Customer Offer, ACCN OR1109
Openreach proposes a second, parallel discount available only in the areas where Virgin Media O2 has built its own network. Its mechanics match the national incremental offer: a quarterly target drawn from the provider’s April 2026 orders, nothing paid on volumes up to that target, and a connection rebate plus a monthly rental discount on everything above it. The difference is that a provider operating in a Virgin Media O2 area would receive this offer in addition to the national one, so the combined discount on a marginal order in those areas runs deeper than anything on offer elsewhere in the country. Charging different prices in different parts of the same regulated geographic market is prohibited unless Ofcom agrees to it, so Openreach both gave notice of the offer as a conditional one and applied for Ofcom’s consent. It is due to start on 1 October 2026 if that consent is given.
Incremental Ethernet Net Demand Offer, ACCN OR1110
This offer applies to business connectivity rather than residential broadband. It covers Ethernet Access Direct, the dedicated uncontended circuits providers buy from Openreach to serve business customers, data centres and mobile backhaul, at the 100Mbit/s and 1Gbit/s speeds. Openreach gives each provider a target equal to 90 per cent of the net Ethernet orders it placed between 1 April 2025 and 31 March 2026, net meaning orders placed less those cancelled before the circuit was installed. That annual figure is then split evenly into two six-month periods, the first running from 1 October 2026 to 31 March 2027 and the second from 1 April 2027 to 30 September 2027. Orders above target in a period earn a rebate on the connection charge, calculated from the average connection price across the provider’s qualifying orders in that period. The rebate stops once orders run more than half again above target, so a provider is paid for beating its target but not for beating it by a wide margin. The offer is national and runs for a year from 1 October 2026.
Extension of two existing Equinox incentives, ACCN OR1105
Equinox is the name Openreach gives to its long-running discount scheme on full-fibre products, introduced in 2021 and extended in 2023, under which providers pay lower wholesale prices in return for putting the bulk of their new orders onto Openreach fibre. Two incentives inside that scheme were due to run out. The first is a discount on 10Gbit/s GEA Cablelink, the high-capacity link connecting a provider’s own equipment to the Openreach network inside an exchange. The second is a try-before-you-buy incentive on the 550Mbit/s product, which lets a provider test the service before committing to it. Openreach proposes to run both for a further six months from 1 October 2026, on terms that are otherwise unchanged. Because extending them alters the terms of a discount scheme that is already conditional on volume, Openreach gave 120 days’ notice rather than treating the extension as a simple price cut.
One more offer sits outside this group of six. On 6 June 2026 Openreach gave notice of an EAD re-sign offer, in ACCN OR114, open to Ethernet Access Direct circuits at speeds up to and including 1Gbit/s which a provider already has in place and recommits to. It took effect on 7 July 2026 on 28 days’ notice. Altnet respondents asked Ofcom to assess it together with the Ethernet offer. It is not the subject of this consultation.
The three tests
Under the Telecoms Access Review 2026-31, three requirements can apply to Openreach commercial offers. They come from conditions Ofcom set under the Communications Act 2003 on a finding that Openreach holds significant market power.
Advance notice, SMP Conditions 8.5 and 8.6
SMP Condition 8.6 requires 120 days’ notice where the price or other contractual conditions are conditional on the volume or range of services purchased, up from the 90 days that applied under the previous market review. Condition 8.5 sets shorter periods for other changes, including 28 days for a change relating solely to a price reduction. Which period applies is contestable, not mechanical. Altnet respondents argued the Frontbook ARPU share offer was in substance conditional, because the effective rental charge turns on the provider’s order mix.
Conditionality, the barrier to using a rival network
Where an offer is conditional, Ofcom asks whether its structure potentially deters providers from switching volumes to a rival network. The first question in that framework operates as a gate, and if the answer is no, Ofcom goes no further. The concern behind it is loyalty inducement and pricing contingent on large volume commitments, and Ofcom said in the review that where necessary it would intervene to prevent such terms, including through its direction-making powers.
Geographic discrimination, SMP Condition 4
Condition 4.1 prohibits undue discrimination in the provision of network access, except where Ofcom consents in writing. Conditions 4.4 to 4.6, scoped to WLA Area 2, deem discrimination shown where Openreach charges different prices in different geographic areas for the relevant rental services or connection fees, or makes a retail inducement offer that varies by the consumer’s location. Because the prohibition operates subject to consent, Openreach can apply for permission to do what would otherwise be prohibited, which is the route it took on the Virgin Media O2 offer.
Price level, SMP Conditions 1.3 to 1.5
Openreach’s full-fibre charges must be fair and reasonable, so that the margin between its full-fibre price and its physical infrastructure access price leaves a reasonably efficient operator able to recover its costs. Ofcom measures this against a cost range derived from its 2026 Fibre Cost Model. The range published in the review was £13.59 to £21.21 per month in 2026/27 prices, with a midpoint of £17.40; for this assessment Ofcom used £13.78 to £21.51 per month, midpoint £17.64. The model assumes part of the deployment cost is recovered through a one-off connection charge, taken at £40.04 in the review and updated here to £41.47 in line with Equinox 2 prices as at 1 April 2026. Ofcom says the comparison is not a bright line test, but that it is more likely to have concerns where prices sit at the mid to lower end of the range, and that it also weighs how many customers are affected, the effect on price differentials with alternative networks, the effect on take-up, and whether the reduction is aimed at a particular segment.
Ethernet has subtly different applicable rules. Because a charge control already applies in LLA Area 2 and LLA Area 3, Condition 1.4 governs in those markets and excludes charges from the fairness requirement; Condition 1.3, which includes charges, applies only in the high network reach market. Ofcom records that the fairness obligation on leased line access was not intended to address low wholesale prices at all, its purpose being to address a squeeze between the wholesale and retail leased line markets. Ofcom looked at the Ethernet price, but benchmarked it against Openreach’s own costs, using fully allocated costs from the restated 2024/25 BT regulatory financial statements together with Openreach’s own long run incremental cost estimates, assessed over 36 months. Altnet respondents noted that Ofcom has calculated no reasonably efficient operator range for EAD.
How Ofcom applied the tests to the Openreach commercial offers
| Offer | Advance notice | Conditionality | Geographic discrimination | Price level |
|---|---|---|---|---|
| Frontbook ARPU share OR1106 | Cleared. Not conditional, so 28 days correct | Not engaged | Not engaged. Nationwide | Cleared. No fair and reasonable concern |
| Box Swap OR1107 | Cleared. 28 days correct | Not engaged | Not engaged. Nationwide | Cleared. No fair and reasonable concern |
| Equinox incentives extension OR1105 | Cleared. Notified under Condition 8.6 | Cleared. No concern on the conditional terms | Not engaged | Cleared. Price already within the pricing assessment |
| Incremental New to Openreach Customer Offer OR1108 | Cleared. Notified under Condition 8.6 | Cleared. Does not in itself create a barrier to using a rival network | Not engaged. National offer | Adverse finding. Charges not fair and reasonable; margins may not allow a reasonably efficient operator to recover its costs. Withdrawal proposed |
| Geographic Incremental New to Openreach Offer OR1109, Virgin Media O2 areas | Cleared. Notified under Condition 8.6 | Cleared. No barrier to using a rival network | Cleared. Targeting does not amount to undue discrimination | Cleared. Scale of discount not sufficiently likely to harm long-term competition |
| Incremental Ethernet Net Demand OR1110 | Cleared. Notified under Condition 8.6 | Cleared. No barrier to using a rival network | Not engaged. National offer | Cleared. No prima facie concern against Openreach’s own EAD costs |
On advance notice, Ofcom rejected the argument that the Frontbook ARPU share offer should have carried 120 days. Its reasoning is that the offer sets no volume or range target a provider must meet: a provider ordering only products priced above the ARPU threshold receives the rebate whatever the volume, and in other product mixes it is the provider that chooses what to buy. On that basis the offer is not conditional on volume or range, and Condition 8.6 does not apply.
On conditionality, Ofcom cleared every offer to which the test applied, including the one it proposes to block. Virgin Media O2 argued the tiered rental rebate creates a strong loyalty-inducing effect by tying longer rebate durations to sustained volume performance. One respondent argued the 30-month tier could lock providers into the Openreach footprint until late 2029. Another respondent raised the treatment of cancellations under the Ethernet offer. Ofcom worked through the mechanics and concluded that a provider moving volumes to an alternative network loses the rebate only on the circuits it moves, while the rebates on circuits it continues to place with Openreach are unaffected, so the structure does not deter switching at the margin. The argument the industry has run since Equinox 1 did not carry a single cell.
On geographic discrimination, the only offer engaging Condition 4 was cleared, which is the more surprising outcome. Ofcom accepts that the Virgin Media O2 offer is aimed at the customers who matter most to alternative networks, and that it applies in areas where those networks have significant presence but are not yet established and sustainable competitors. It nonetheless proposes to allow it, on the view that the scale of the discount makes the risk of harm to long-term competition insufficiently plausible. That is a judgement about degree, not about principle, and Ofcom is explicit that it reaches it given the specifics of this offer and on this occasion.
On price level, Ofcom assessed the Frontbook and Box Swap offers first, deliberately, because those are already in the market and therefore set the starting basis for its estimates of Openreach’s prices and for the reasonably efficient operator range against which it measured the two incremental offers. Having found no concern on those, it folded their effect into the baseline. Against that baseline, its provisional view is that the discounts under the Incremental New to Openreach Customer Offer produce margins that may not allow a reasonably efficient operator to recover its costs. The reasoning turns on targeting, not on the size of the discount in isolation: Openreach is uniquely able to reduce prices for exactly the customers that matter most to a rival network’s growth while leaving prices for everyone else unchanged, and a rival already pricing keenly to build take-up may not be able to follow. The obligation also applies in WLA Area 3, where Ofcom has no network-competition objective, and there the question is whether the margin is in line with the opportunity for market entry that existed when the alternative networks made their investments.
What happens next
| Date | Step |
|---|---|
| 1 June 2026 | Openreach notifies the six offers, four of them under the 120-day route |
| 2 to 19 June 2026 | Ofcom Call for Inputs opens and closes; Ofcom also meets stakeholders and uses its formal information-gathering powers with Openreach, Virgin Media O2, alternative networks and internet service providers |
| 1 July 2026 | Frontbook ARPU share and Box Swap offers take effect, having run their 28 days |
| 7 July 2026 | EAD re-sign offer takes effect |
| 28 July 2026 | Consultation published, with sixteen Call for Inputs responses |
| 27 August 2026 | Consultation closes |
| End of September 2026 | Ofcom expects to publish its final decision. The 120-day notification period that began on 1 June expires at the end of the month, so the decision and the deadline arrive together |
| 1 October 2026 | The Incremental New to Openreach Customer Offer, the geographic version, the Ethernet offer and the Equinox extension are all notified to take effect |
| 31 March 2027 | First Ethernet six-month baseline period ends |
| 30 June 2027 | Frontbook ARPU share and Box Swap offer periods end |
The timetable for the Openreach commercial offers is tight by design, and that limits what a response can achieve. The 120-day period exists so that Ofcom can assess an offer and intervene before it takes effect, and here the window closes days before the go-live date. There is no slack for a second round of evidence. Implementation planning is running in parallel: the Frontbook and Box Swap offers are already live and unaffected, so the commercial question for a provider is what its position looks like on 1 October with and without the incremental offer, and what happens to volumes it has already committed on the assumption the rebates would be there.
What a response should contain
The consultation puts four questions on the Openreach commercial offers, each asking whether the respondent agrees with Ofcom’s assessment of a named offer: question 3.1 on the Frontbook and Box Swap offers, 4.1 on the offer Ofcom proposes to withdraw, 5.1 on the geographic offer and 6.1 on the Ethernet offer. Ofcom is unlikely to be moved by a response pitched at the level of principle, because the finding that went against Openreach is arithmetical and the findings that went in its favour turn on offer mechanics that Ofcom has already worked through in detail.
The productive target is the cost model rather than the discount. Ofcom’s conclusion rests on its own reasonably efficient operator range, its assumptions about the connection charge and the eligible proportion of customers, and its treatment of the offers already in the market as part of the baseline. Each of those is contestable with figures. The cumulative point is live for the same reason: an offer that clears on its own may not clear on top of what is already in place, and Ofcom conceded the principle by sequencing its own assessment that way. On Ethernet the benchmark differs again, and the absence of a reasonably efficient operator range for EAD is a gap, not a finding. Providers buying from Openreach have the opposite interest and less time: if Ofcom makes the direction, a discount priced into plans since June is withdrawn, and the carve-out for providers below 1,000 monthly orders goes with it.
Viewpoint
When we wrote about these offers in June, the record supported the expectation that Ofcom would not intervene, and that was the right reading on the evidence then available. What has changed is not the test but which limb of it applied. Seventeen assessments produced one adverse finding, and it came on the requirement that is quantitative and modelled, not on the ones that turn on offer design. The conditionality argument has now failed four times. It is intuitive and easy to explain, but it has never succeeded, because it requires a finding that a discount available to all comers on published terms locks buyers in.
A single adverse finding is easier for Openreach to answer than a structural objection would be, and easier to design around next time by pitching the following targeted offer just above the top of the range. Ofcom’s answer to the overarching complaints, about drip-fed reductions, cliff edges at the end of offer periods and the precedent set at the start of a five-year review, is that its package of remedies lets it act and that it will continue to monitor. However, monitoring is not a remedy. The exam question is whether a modelled price test will do the work that a test of offer design has not.
Frequently asked questions
What has Ofcom proposed?
Of the six Openreach commercial offers notified on 1 June 2026, Ofcom proposes to direct Openreach to withdraw one, the Incremental New to Openreach Customer Offer, which is due to take effect on 1 October 2026. It proposes no intervention on the other five. The consultation closes on 27 August 2026 and a final decision is expected by the end of September.
Which test did the offer fail?
The requirement in SMP Conditions 1.3 to 1.5 that Openreach’s full-fibre charges be fair and reasonable. Ofcom considers the resulting margins may not allow a reasonably efficient operator to recover its costs. The offer cleared the advance notice and conditionality tests, and the geographic prohibition was not engaged because the offer is national.
What is the reasonably efficient operator range?
A cost range Ofcom derives from its 2026 Fibre Cost Model, representing what a reasonably efficient operator would need to recover. The range published in the Telecoms Access Review was £13.59 to £21.21 per month in 2026/27 prices, with a midpoint of £17.40. For this assessment Ofcom used £13.78 to £21.51, midpoint £17.64. Ofcom says the comparison is not a bright line test but that concerns are likelier where prices sit at the mid to lower end.
Is this the same as a competition law margin squeeze?
No. A margin squeeze under Chapter II of the Competition Act 1998 is assessed against an equally efficient operator, meaning a rival with the dominant firm’s own costs. Ofcom’s requirement is benchmarked against a reasonably efficient operator, a lower threshold suited to protecting an entrant that has not yet reached the incumbent’s scale.
Why is Ethernet treated differently?
Because a charge control already applies in LLA Area 2 and LLA Area 3, Condition 1.4 governs in those markets and excludes charges from the fairness requirement. Ofcom records that the leased line access fairness obligation was not intended to address low wholesale prices, and it assessed the Ethernet offer against Openreach’s own fully allocated and incremental costs rather than a reasonably efficient operator range, which it has not calculated for EAD.
If you are assessing how the Openreach commercial offers and the proposed direction affect your network, your wholesale position or your implementation plans for 1 October 2026, or preparing a response before 27 August 2026, Bratby Law advises operators, alternative networks and connectivity providers on access regulation and Ofcom submissions. Contact Rob Bratby.
