Ofcom Provisionally Rules BT “Overcharged” TalkTalk for Fault Finding

The UK telecoms regulator has today provisionally concluded that BT “overcharged” TalkTalk for their Special Fault Investigation (SFI) engineer service and Time Related Charges (TRC), both of which are often used to help resolve customer phone and broadband problems. A repayment could be due.

Complaints about the charges for Openreach’s (BT) SFI and TRCs are nothing new in this industry, with ISPs sometimes claiming that they’ve been overcharged or can end up being asked to foot the bill for BT’s engineers to effectively find and repair faults that exist within Openreach’s own realm (network).

A little over two months ago TalkTalk took a similar dispute to Ofcom, where they complained that BT’s related SFI + TRC charges between 1st April 2011 to 30th June 2014 “were not cost-orientated” and were therefore “inconsistent” with BT’s basis of charges obligations in relation to these services (here).

In today’s provisional conclusion Ofcom has broadly sided with TalkTalk and suggested that it is “appropriate and proportionate” for BT to make repayments, but they’ve left it up to BT and TalkTalk to agree the exact level of repayment. Sadly it’s not possible to calculate precisely much this might cost BT as the relevant data has been redacted from Ofcom’s report.

Ofcom’s Provisional Conclusions

We provisionally conclude that BT has overcharged TalkTalk for TRCs and SFIs during the Relevant Period and that it would be appropriate in this case to order BT to repay the overcharge to TalkTalk, with interest. We consider an appropriate repayment level to be the difference between the level of the charge and [Distributed Stand Alone Cost].

We have identified the amount by which BT has overcharged for each service in each year. We do not have accurate information as to the volumes of each service purchased by TalkTalk and therefore propose to leave it to the Parties to agree the exact levels of repayment that are due, based on our calculated unit charges. We note repayment is dependent on the outcome of the Ethernet appeals.

However BT has argued that Ofcom “does not have … the power to order retroactive payments in dispute resolution proceedings. This is because the CRF does not permit the NRAs to order administrative payments as a remedy for past breaches.”

At this point BT referred to the pending Ethernet appeals before the Court of Appeal, which has been going on for years since a 2009 decision in which Ofcom ruled against BT over the pricing of Partial Private Circuits (PPCs). BT has repeatedly tried to overturn the regulator’s decision, yet they still have an active appeal and this isn’t scheduled to be heard until March 2017.

The PPC case has some similarities to Ofcom’s regulatory approach in the above ruling, hence the need to link them. “We do not agree with BT’s argument that Ofcom does not have the power to order repayments in this case,” said the regulator.

Ofcom continued, “Overcharging for WLA services, including TRCs and SFIs, distorts competition between BT and its competitors, which is ultimately detrimental to consumers. We therefore believe it would be appropriate, in light of our duties to further the interests of consumers, where appropriate by promoting competition, in the Dispute to require repayments.”

A BT Spokesperson told ISPreview.co.uk:

“These are provisional findings relating to a detailed and complex pricing issue which couldn’t be resolved commercially.

BT followed Ofcom’s guidelines to set prices for TRCs and SFIs, so we’re disappointed that the way in which Ofcom has assessed this case differs from our understanding of that guidance.

We will continue to work with Ofcom in advance of any final settlement.”

The regulator has now allowed two weeks for BT, TalkTalk and any other interested parties to offer feedback on their decision, with the closing date being 26th August 2016. It’s worth pointing out that Sky Broadband has also lodged an almost identical complaint to TalkTalk’s and Ofcom now seem likely to reach a similar conclusion (here).