The communications regulator Ofcom has put itself on a collision course with BT Group PLC's (LSE:BT.A) telephone network operator Openreach by saying it may use its powers to stall a new wholesale fibre offer due for launch on April 1.
In a letter issued via the stock exchange, it said a decision on Openreach’s Equinox 2 plan for telecom providers such as Sky, TalkTalk and Vodafone, due by the end of March, will be delayed by two months.
“To provide certainty and stability for industry, our view is that it would not be appropriate for the offer to launch until we issue our final decision,” Ofcom told the market.
“We are considering issuing a Direction to Openreach, using our powers under the Communications Act 2003, to achieve this, unless Openreach voluntarily defers the launch of the offer.”
Equinox 2 is designed to incentivise broadband providers that don’t own their own networks to migrate customers from ‘slow’ copper connections to ultrafast end-to-end fibre.
In an FT interview on last month, BT boss Philip Jansen was reported as saying that Openreach's fibre rollout will "end in tears" for alt-net rivals.
Openreach is yet to respond to Ofcom's letter, though today's update reveals there was exchange of letters between the regulator's CEO, Melanie Dawes, and Jansen to clarify his comments in the interview.
BT shares fell 3% to 142p on Friday morning, following the announcement.
Analysts at Jefferies said that Ofcom's provisional support on early February had been reassuring but today's decision to prolong its review by two months "creates some doubt" and it suspects Ofcom "is keen to demonstrate rigour, lowering risk of legal challenge".
Having spoken to Ofcom this morning, the analysts noted that non-confidential responses to the consultation will be published next week and reveal what new evidence has been presented to Ofcom.
"It seems reasonable to infer that some new evidence has been presented that is causing the regulator to question its approach. Whether this implies that Ofcom might be changing its provisionally supportive view on Equinox 2, or simply that it wants to do the work necessary to avoid being challenged in court, is unclear right now."
The FT interview also "put the regulator under pressure", they noted, with Jansen's comments leading to some alt-nets questioning Ofcom's commitment to network competition.
** UPDATE: Adds share price and broker comment. **