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    Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs

    This is a discussion on Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs within the General Computing and Internet forums, part of the Community channel category; Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs - ISPreview UK BT has set aside ...

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      Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs

      Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs - ISPreview UK
      BT has set aside £300m to repay ISPs, such as TalkTalk and Vodafone, after an investigation by Ofcom found that their network arm (Openreach) had cut compensation payments to other telecoms providers for late installs of high-speed business lines (Ethernet). BT must thus pay a £42m fine.

      Lots of big businesses, ISPs and Mobile Network Operators (MNO) buy wholesale leased line style solutions from Openreach, which holds a position of Significant Market Power (SMP) across most of the United Kingdom. As such Ofcom imposes certain regulatory obligations upon BT, which are intended to promote competition by enabling rivals to compete without needing to invest in a national network.

      This also means that if BT doesn’t play by the rules then rival ISPs can easily end up being stung, although proving that can be difficult. In this case the regulator has found that, between January 2013 and December 2014, BTmisused the terms of its contracts” to reduce compensation payments owed to other telecoms providers for failing to deliver ‘Ethernet’ services on time (original news here and here).

      The contracts require Openreach to deliver related Ethernet services within 30 working days, or pay compensation to the company affected (TalkTalk, Vodafone etc.). However the related contracts (clause 2.3) also contain a Deemed Consent mechanism, which exist to cover a variety of factors that could cause delays (e.g. when dealing with infrastructure damage, clear blocked cable ducts, tackle asbestos, gain specific approvals for street works or a variety of other issues).

      So if BT encounters problems that require more time to resolve (i.e. extend the provision window), then in certain circumstances it can assume that a customer has agreed to an extension. But Ofcom found that BT did this “retrospectively over a sustained period, to reduce the level of compensation it owed to telecoms providers“. The regulator’s view is that this harmed ISPs, businesses and consumers who all rely on such services.

      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.”
      On top of that BT will also be fined £300,000 for failing to provide Ofcom with accurate and complete information for the original dispute, the Business Connectivity Market Review 2016 and this investigation.

      An Openreach spokesperson previously told ISPreview.co.uk (here), “Ethernet provision is very complex and errors can occur in the process, though these were neither deliberate nor systematic.” Clearly Ofcom seems to disagreed with some aspects of that viewpoint.

      Clive Selley, Openreach CEO, said:

      “We apologise wholeheartedly for the mistakes Openreach made in the past when processing orders for a number of high-speed business connections. This shouldn’t have happened and we fully accept Ofcom’s findings.

      Since I became CEO of Openreach in February 2016, we have monitored this area very closely, we have made improvements to how we process and deliver such connections, and we will make sure the same mistakes aren’t repeated in future.

      This issue is unrepresentative of the vast majority of work conducted by Openreach and we are committed to delivering outstanding service for our customers.”
      Gavin Patterson, BT Group CEO, said:

      “The investigation into historical Deemed Consent practices at Openreach revealed we fell short of the high standards we expect in serving our Communications Provider customers.

      We take this issue very seriously and we have put in place measures, controls and people to prevent it happening again.

      My management team and I are determined that BT applies the highest standards when serving our customers.”
      BT said that they don’t agree with elements of Ofcom’s decision, but that they “decided to accept it in the interests of reaching a swift and final resolution.” No doubt they wouldn’t have wanted this cloud to hang over Openreach, particularly now that it’s adopting legal separation from the main BT Group.

      Openreach now intend to contact all affected network operators over the “coming weeks,” when they will set out their intention to offer a “full and fair settlement” and interestingly this will cover the period from January 2013 to September 2016 (beyond Ofcom’s investigation and to the point at which Openreach introduced major reforms). Further changes may also be made to the Deemed Consent process.

      Apparently the penalty incorporates a 30% reduction to reflect BT’s agreement to settle Ofcom’s investigation by admitting full liability, and to set up a scheme to compensate the telecoms providers that have been affected. BT must now compensate, within 12 months, all of the affected providers who faced financial loss because of its conduct.

      In-between Italian accounting scandals (here) and having their Openreach division forced into “legal separation,” the first quarter of 2017 hasn’t been much fun for BT. Lest we forget the fines against their EE (£2.7m for overcharging) and Plusnet (£880,00 for incorrect billing) divisions.


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      Re: Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs

      I predict a rise in BT charges to customers.

      TomD


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      Re: Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs

      Quote Originally Posted by Isitme View Post
      I predict a rise in BT charges to customers.
      I'm hoping that the rises will be for BT Sport

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      Re: Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs

      What is the point in a fine, it will only get passed on to the customer as an increase eventually. The customer being the one it affected in the first place, so a double, initial hassle and then extra cost!

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      Re: Ofcom Slaps BT with £42 Million Fine for Delayed UK Leased Line Installs

      I would expect such a fine to eat into their profits.

      Since Openreach is still currently a part of BT Plc, that means that the shareholders lose out in the form of a reduced payment.

      The same should aso go for the £300m (estimated) that it needs to repay the ISPs.

      Of course if BT Plc has been ploughing their profits into propping up BT Sport, then I have absolutely no sympathy for what will be coming next. If, as I suspect, BT Sport has been propped up by the profits that BTO have been making at the expense of all landline subscribers (other than VM & KCOM), then they'll have to start charging people a fair rate for BT Sport.

      Of course if this means that BT Sport collapses, then it'll mean that Sky can start bidding a fair rate for the rights to various sports events and not the inflated prices pushed out because of BT Plc wanting to kick Sky and reduce their worth.

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