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Ofcom Fines BT UK £95m for Overcharging on Wholesale Ethernet Services

Saturday, December 22nd, 2012 (7:51 am) - Score 1,995
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A two year legal battle between BT and several major ISPs has finally ended with Ofcom forcing the national UK telecoms operator to pay a fine of £94,823,000 after it was found to have overcharged the broadband providers for Backhaul Extension Services (BES) between 2004/6 and 2011.

BTOpenreach states that Backhaul Extension Services are “high speed, permanently connected, point-to-point data circuits” that provide a secure link between a telephone exchange and an ISP or between an exchange and another exchange (Daisy Chain). Internet providers often used BES for connecting unbundled (LLU) exchanges with their own networks, although for obvious reasons the original product has since been replaced.

Ofcoms Statement

We have concluded that BT has overcharged the parties a total of £94,823,000 for certain wholesale Ethernet services and that BT is required to make repayments for the full amounts by which it has overcharged them.”

The move means that TalkTalk, Virgin Media, Sky Broadband (BSkyB), Verizon UK and Cable & Wireless (CW) should be set to receive a nice repayment in the not too distant future. However BT, which not so long ago lost a related battle in the Court of Appeal (CAT), hasn’t given up just yet.

A BT Spokesperson said:

We have provided evidence to Ofcom that shows we complied with our regulatory obligations and that we kept them informed of our pricing decisions throughout the period being disputed. The market for Ethernet services has grown strongly over the period and there is no evidence of economic harm to support Ofcom’s findings.”

BT said it was “disappointed” and refuted Ofcom’s findings. The operator said that it would now move to consider all of its options and has threatened to launch another appeal.

On the surface this may seem like a victory for Ofcom and the ISPs, yet it could be another story for consumers. BT has a nasty habit of recovering any lost monies by simply hiking prices in other areas.

Indeed excessive price increases for Phone Line Rental and Calls, which often go well above the normal level of inflation, have become an all too common occurrence and often appear to follow such rulings.

The related documentation suggests, in our own view, that any appeal by BT to the relevant competition authority would need to be lodged before 21st February 2013.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
5 Responses
  1. Avatar dragoneast

    It’s the issue we all choose to forget – everything has to be paid for. And in the end – even investors and shareholders need a return (and where do we think the money comes for our pensions and income, and what’s kept house prices afloat until recently?). So ultimately the consumer pays; except that we all want “summat for nowt” (= someone else pays for it), and bawl like babies when we don’t get it. Merry Christmas everyone!

    • Avatar Bob2002

      The consumer has already paid when BT was overcharging its competitors. This is not about something for nothing. You might bawl like a baby if BT overcharged you by £95 million.

  2. Avatar jo

    Good On OFCOM charging greedy getz BT as there prices are ridiculous but no sympathy at all on them . haha

  3. Avatar Bob

    My view is the BT Group ought to be structures as seperate companies rather than just as business units. BT Group can still own these companies. By doing this yiou get proper seperation of costs and remove the conflict of interests
    BT Group already own some seperates companies such as DABS

  4. Avatar Michael

    Happy New Year BT 😛

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