Broadband News

Slow Ethernet installs by BT Group bring record £42 million fine

Ofcom has got out the big stick today to beat up BT Group, and has issued a record breaking £42 million fine due to BT breaking rules around how extensions to the 30 day install period for Ethernet services should have been handled between January 2013 and December 2014.

"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."

Gaucho Rasmussen, Ofcom’s Investigations Director

The basic install period given for an Ethernet leased line is 30 days, but when problems are encountered extensions can be granted (e.g. wayleave is taking time to negotiate) but if the 30 working day rule is broken when no extension was agreed compensation is due, no matter whether that business is a big company like Vodafone, or a medium sized company seeking to install reliable business broadband. It seems BT was making some assumptions based on carefully worded contracts that meant it thought customers had agreed to the time extension, thus reducing the compensation due.

The fine would have been 30% higher but BT has accepted full liability and is in the process of setting up a scheme to compensate companies affected and this must be completed within 12 months. The ubiquity of the BT footprint means that even for many Ethernet services sold by third parties the actual physical connection is via BT but this is slowly now changing as more options appear.

There is also a £300,000 fine for not providing Ofcom with information that was complete in its Business Connectivity Review 2016, and this once paid to Ofcom will be passed onto HM Treasury. There will no doubt be a lots of analysts looking to the financial results to see if this record fine does make an impact on the profit margins which it should do, increasing the price for Ethernet services is something that cannot happen as Ofcom has been pushing down the prices of the product for sometime.

So how did BT let this happen? Difficult to know for sure, but if you rewind your memory to the 2013 and 2014 period it was a time when lots of third party contractors were being used and consumers were complaining about the standards Openreach was delivering, plus the commercial VDSL2 roll-outs and BDUK projects were at peak delivery volume. So perhaps someone took their eye off the ball and diverted resources to hit some metrics in one area, but failed to appreciate the eventual impact on other areas of doing so.

This record fine helps to underscore why there was so much campaigning for the full breakup of Openreach away from BT Group, i.e. the other communications providers were viewing things in light of what they knew about this on-going investigation. The real question is whether Openreach has actually turned the corner now and changes of the last 18 months plus the new board mean that once people stop beating them up other past transgressions that things are materially better. Though ironically for those that want a less powerful national telecoms operator, a Laurel and Hardy delivery service with a sea of calm visible PR veneer might be an easier market for others to compete in and undercut on the four key metrics of speed of service, delivery time, reliability and pricing.

Comments

2013 and 2014?

That period coincides with when BT had introduced FTTPoD.

In early 2014, BT put the prices up because FTTPoD was taking too much resource.

In January 2015, BT withdrew FTTPoD because it took too much resource. I recall that, at the time, BT stated one reason as that the queues for both FoD and Ethernet were too high.

  • WWWombat
  • 8 months ago

Liv Garfield messed and Joe garner wasn't man enough to unravel the mess.

  • ribble
  • 8 months ago

Down to poor senior management who didn't understand the complexity of the operations they were supposed to be in charge of.

  • ribble
  • 8 months ago

They broke apart established teams that managed the job progression as well as skilled field teams, and tried to make efficiency savings which ultimately have backed fired disastrously.

  • ribble
  • 8 months ago

First of all I ain't no fanboi of BT/OR having avoided any kind of BtW based service since 2010. However my experience so far on my ongoing FoD order has been top notch. OR have been giving regular order updates to my ISP-to-be (Fluidone), Engineer appointments have been kept and OR started laying fibre to my home only a week after the survey. Whilst BT/OR still have plenty of time to make a dogs dinner of my installation, I'm beginning to think maybe, just maybe, they have turned a corner wrt bespoke orders.

  • baby_frogmella
  • 8 months ago

Cont'd
I remember Zen support very clearly telling me that they're not selling FoD anymore based on their poor experience with BT/OR wrt installation timescales & procedures.

  • baby_frogmella
  • 8 months ago

@ WWWombat - Openreach never withdrew FTTPoD, it was only withdrawn by BT Wholesale. The reason for BT Wholesale withdrawing it was due to the lengthy processes involved in getting the service installing and running from the point the order was placed (I heard about some stories of 18 months!). It made no sense for BT Wholesale to offer a product, aimed at businesses, that was unable to deliver an installation within a reasonable timescale.

  • AndyCZ
  • 8 months ago

@ ribble - I think the biggest issue with ethernet services is that Openreach failed to plan the growth in demand. There was a complete shortage of staff, coupled by outdated systems and processes that led to massive delays across the country. Things have certainly improved now though, compared to when you look at the backlogs and complaints of 12 months ago.

  • AndyCZ
  • 8 months ago

@AndyCZ
Note carefully who I said had withdrawn it. BT.

The decision about what to drop was, I'm sure, carefully decided at group level, to have the desired outcome mixed with other commitments.

In your response to @ribble, you are both, we are all, saying the same thing ... "efficiency savings" = "complete shortage of staff" = "resource".

  • WWWombat
  • 8 months ago

Is it just me, or does nobody else understand what that last sentence of editorialisation is meant to mean ?
I thought _every_ BigCorp (and most MediumCorps) ran a sea of calm visible PR, with reality breaking the surface every so often, for varying measures of "often"

  • mpellatt
  • 8 months ago

It means everyone who has dealt with a firm has seen the mess, but the visible PR bubble is saying all is good, but reality everyone knows its a mess.

A much easier opportunity for competitors, then a competent delivery of service along side a wonderful PR veneer that builds on top of the already great delivery.

  • andrew
  • thinkbroadband staff
  • 8 months ago

I see you did not expand on the (£300million) compensation payments resulting from this, but I think you got away with it.... :-)

  • mikejp
  • 8 months ago

Am aware of some outlets reporting £300m compensation is due, but this was not covered by the Ofcom press release and cannot spot it on the Ofcom site, so have not added it.

Maybe some sources got additional briefings from Ofcom.

  • andrew
  • thinkbroadband staff
  • 8 months ago

Hi Broadband Watchers.
All this slush money circulating about is only going either to the ISPs it will be the customer who pays in the end. I am unable to say to much or the Blackmamba will be placed on the naughty step thus effecting the Mamba project in Super Surrey (99.7 % at 15 meg Dorking Meeting). Please remember the Blackmamba resides at Saffron and is very determined to be fair to all customers.

  • Blackmamba
  • 8 months ago

The £300mn is what BT are estimating it would seem - http://btplc.com/News/#/pressreleases/ofcom-investigation-into-bts-use-of-deemed-consent-1878142

  • AndyCZ
  • 8 months ago

@ Blackmamba - I have no idea what you are talking about. Why will the customers pay for compensation Openreach is paying for delayed ethernet installations going back several years?

  • AndyCZ
  • 8 months ago

Hi Andy.
I think £300 M would pay for many customers to have fibre access instead of it being in another location which was a past calculation ( Vodaphone/CW) Please remember I am only interested in today's situation on all customers.

  • Blackmamba
  • 8 months ago

blackmamba this takes the biscuit as proves you have absolutely not idea hat you are talking about this is around Ethernet delivery in 2012/2013 and absolutely nothing to do with BDUk or anything else - as clearly indicated above -- 30 day install period for Ethernet services should have been handled between January 2013 and December 2014.

  • fastman
  • 8 months ago

this monies will got back to the Service providers who incurred the SLA's them selves with their customer - it will then be up to them what they do with it

  • fastman
  • 8 months ago

Hi Fastman.
I think you took it hook line and sinker I have rechecked where the money is going as I had checked the money flow on both systems even checking transfer off staff Openreach on the work load at Churt Surrey when an circuit was up to the 18 month late. There were five other circuits involved all road blockages and the 3 months road works that had to be registered on Elgin. This was directed by the Dorking Mamba project. Haslemere- Frensham fibre link 250 approx

  • Blackmamba
  • 8 months ago

@Blackmamba Can you stop the riddler style posts

  • andrew
  • thinkbroadband staff
  • 8 months ago

@BM - What is the Dorking Mamba project?

  • Somerset
  • 8 months ago

Hi Somerset.
The Dorking Mamba Project to get as many Post Codes that can get 15 meg using the Money from SCC BT/ Openreach to get a result of 99.7 % above 15 Meg across Surrey until all the money is spent this should off load AdsL lines thus retrieving more clawback..

  • Blackmamba
  • 8 months ago

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