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BT handed massive fine over ethernet breach

Date: 27th March 2017
Topic: News
Author: Philip Mason
Tags:
Ofcom, BT

Ofcom has announced that BT will be fined £42 million for what the regulator calls a ‘serious breach’ of its rules, in relation to the operator’s reduction of late installation compensation payments to other telecoms providers.

The penalty is a result of an investigation by Ofcom into BT’s network arm Openreach, launched in November 2015. This 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’.

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Ofcom's Riverside House headquarters

Ofcom investigations director Gaucho Rasmussen said: “These high-speed [ethernet] 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.”

According to Ofcom, the enforcement action was taken because “BT breached rules that address the company’s ‘significant market power’”. This market power, said the regulator, comes from other telecoms companies’ reliance on access to BT’s network to provide services to their customers.

BT’s contracts require it to deliver Ethernet services within 30 working days, or pay compensation to the company affected. If the company encounters problems requiring more time to solve it can, in certain circumstances, assume that a customer has agreed to an extension. Ofcom found that BT did this retrospectively, thereby reducing the level of compensation.

Alongside the penalty of £42 million, BT will also be fined an additional £300,000 for failing to provide information to Ofcom. The penalty incorporates a 30 per cent reduction following the company’s agreement to settle Ofcom’s investigation by admitting full liability. It has also set up a scheme to compensate affected companies.

Speaking of the UK’s fixed line network connectivity in the light of Ofcom’s decision, Comms365 managing director, Mike van Bunnens said: “The Ofcom fines will kick-start BT into addressing the problem, but there isn’t going to be an overnight fix. For organisations that simply cannot afford to wait for BT to catch up, 4G services could hold the answer.

“It is no longer a consumer only technology that is known to be a little temperamental. By taking several 4G connections and bonding them together, businesses can access high-speed, reliable broadband-like connectivity through the mobile network.”


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