TalkTalk and BT Battle Over £300m Ethernet Compensation for Late Installs

UK ISP TalkTalk has reportedly complained that BT is not offering them enough compensation, which comes after Ofcom ruled in March 2017 that Openreach had broken their rules by failing to pay ISPs proper compensation for late installations of high-speed business lines (Ethernet).

At the time Ofcom found that Openreach “misused the terms of its contracts” to reduce compensation payments owed to other telecoms providers for failing to deliver Ethernet services on time and as a result the regulator imposed a fine on the operator worth £42 million (here). The outcome was something that Openreach’s CEO, Clive Selley, said they “fully accept.”

As part of that Openreach also set aside £300 million to repay ISPs that had been affected by their past behaviour (e.g. TalkTalk and Vodafone) and they pledged to contact all related network operators with offers of “full and fair settlement,” which will cover the period from January 2013 to September 2016.

However a new report in City AM claims that TalkTalk had hoped to secure compensation of £60-70m (based on their UK market share), yet Openreach has allegedly only offered them a figure in the “mid-teens” of millions (based on the number of lines ordered by ISPs and the number of times the related delay clause was applied). Suffice to say that there’s a dispute over the methodology of calculating compensation.

An Openreach Spokesperson said:

“We will compensate all of the affected Communications Providers outside of BT in full, within twelve months. Our settlement offer reflects Ofcom’s findings and methodology, and we are contacting those affected this month.”

Apparently Openreach has already managed to agree terms with two smaller ISPs, although many others are still waiting to hear from the operator and the dispute with TalkTalk could potentially delay the final outcome.

Curiously City AM also appears to suggest that the conflict over methodology might delay Openreach’s separate consultation with ISPs on their approach to delivering more “full fibre” broadband (potentially up to 10 million FTTP premises) across the United Kingdom, although it doesn’t say why.

UPDATE 1:21pm

I’ve updated the final paragraph because we now understand that City AM was referencing Openreach’s FTTP consultation and not their USO one, although we still don’t know why that has been conflated with the Ethernet dispute.