Hold the line…… £42 million pound fine….
BT to be fined £42m for seriously breaching Ofcom’s rules.
The BT engineering division, Openreach, are responsible for the roll out and installation of cabling needed by the majority of other telecoms providers to run superfast broadband and to link mobile phone towers to the main network. These important networks underpin the UK’s communications infrastructure. In September 2015 Vodafone made claims to Ofcom (the UK Telecoms regulator) that BT was manipulating its fibre-optic installation figures to avoid compensation payments for delays in connecting high-speed business lines.
BT is obliged, under Ofcom’s rules, to install Ethernet services to its wholesale customers (providers such as Vodafone and TalkTalk), in accordance with its contracts, and to make compensation payments for late delivery. BT’s contracts require it to deliver Ethernet services within 30 working days, or pay compensation to the company affected. Ethernet services are dedicated, high-speed cables used by large businesses, and mobile and broadband providers, to transmit data. These lines also provide vital, high-capacity links for hospitals, schools and libraries.
Openreach did not have to record, or pay compensation, for instances when a line installation could not be completed due to circumstances beyond their control. Examples of legitimate reasons would be adverse weather conditions or being unable to gain access to private land. It was claimed by Vodafone that Openreach was abusing this loophole to cover up planning problems, lack of available engineers to carry out the work and a failure to close roads at the correct times. In the complaint, it cited one instance where an Openreach engineer failed to connect a line because he had forgotten his boots and could not cross a muddy field. Vodafone decided to bring this to Ofcoms attention as they felt Openreach’s failings had slowed down the roll-out of the 4G mobile services for them, and all other UK mobile providers.
Consequently, Ofcom opened their in-depth investigation in November 2015. They found that, between January 2013 and December 2014, BT misused the terms of its contracts to reduce compensation payments owed to other telecoms providers for failing to deliver ‘Ethernet’ services on time.
Additional £300k fine.
BT will also be fined an additional £300,000 for failing to provide information to Ofcom. Through this Ethernet investigation, Ofcom became aware that BT failed to provide accurate and complete information for the original dispute, the Business Connectivity Market Review 2016 and this investigation.
Gaucho Rasmussen, Ofcom’s Investigations Director, said: “These high-speed lines are a vital part of this country’s digital backbone. Millions of people rely on BT’s network for the phone and broadband services they use every day. We found BT broke our rules by failing to pay other telecoms companies proper compensation when these services were not provided on time. The size of our fine reflects how important these rules are to protect competition and, ultimately, consumers and businesses. Our message is clear – we will not tolerate this sort of behaviour.”
The original level of penalty, prior to the application of a 30% reduction, was £60m. The fine will be paid to Ofcom, and passed on to HM Treasury.