Ofcom Hits BT with £6.3m Fine for Rule Breaking in N.Ireland UPDATE

The UK telecoms regulator, Ofcom, has today fined BT (Openreach) £6.3m after they were found to have “failed to meet regulatory obligations” during a tender for the recent £50m Northern Ireland Public Sector Shared Network contract in 2017/18. The decision follows a complaint made by rival company Eir.

Back in 2018 the N.I Department of Finance announced that BT had won a major new contract – initially valued at around £50 million over 9 years (potentially rising to £400m via future changes to its scale and scope) – to provide connectivity services to public sector organisations (2,000 sites) in Northern Ireland via a new Public Sector Shared Network (NI PSSN).

But in April 2019 Ofcom confirmed that they had launched an investigation into this agreement (here), which would “consider” whether or not BT had correctly complied with the relevant Significant Market Power (SMP) conditions (i.e. Openreach are required to treat all its wholesale customers equally), as set out in the regulator’s Fixed Access Market Review 2014 and the Wholesale Local Access Market Review 2018.

In this case the part of BT’s network arm (Openreach) that provided support to Eir’s bid sat within BT Northern Ireland Networks (BTNIN) – staff from both Openreach and BTNIN provided support to BT’s bid.

Ofcom’s Statement

One of the possible solutions that could be used by the bidders for the contract was BT’s Fibre to the Premises on Demand (FoD) product. Our investigation has found that BT’s network arm broke our rules during this tender process, by failing to provide Eir with the same information about this FoD product – including its suitability and cost for delivering the relevant services – as it did to BT’s bid team.

BT’s network arm provided a message to Eir that FoD was not a suitable solution for its bid and that it had delivery limitations. In contrast, the BT bid team was provided information that suggested FoD was suitable for major multi-site network upgrade projects (such as NIPSSN) and could be delivered at such a scale.

It also did not provide the same information on pricing and costs of the FoD product. And it did not provide certain information to Eir on the same timescales and by the same processes as it did for BT. [It’s noted that these failures occurred before the formal legal separation between BT and Openreach had taken place].

Crucially Ofcom states that they have not made any findings on “whether this affected the outcome of the tender process“. Ofcom also recognises that, during the tender, BT had implemented compliance processes to address the risk of not treating the two bidders equally. “We do not believe that the breaches we have found were deliberate,” said the regulator.

Gaucho Rasmussen, Ofcom’s Director of Enforcement, said:

“BT’s network arm broke our rules by failing to treat a rival company and BT’s own bid team equally during the tender for a major public sector contract in Northern Ireland. Our fine reflects how important these rules are, and how seriously we take compliance.”

Ofcom’s fine of £6.3m incorporates a 30% reduction to reflect BT’s agreement to settle Ofcom’s investigation by “admitting full liability“. We have request a comment from the operator and will update when it arrives.

UPDATE 2:03pm

We’ve had a comment from Eir.

Philip O’Meara, Eir Regional Director (Business Northern Ireland), said:

“eir Business Northern Ireland welcomes today’s decision by Ofcom that BT unduly discriminated against eir in tendering for the Northern Ireland Public Sector Shared Network contract. The size of the fine imposed by Ofcom on BT illustrates the gravity of BT’s behaviour. We firmly believe that had BT complied with its regulatory obligations, we would have retained the NIPSSN contract. We are considering our options in light of today’s decision and BT’s admission of liability. eir Business Northern Ireland is keenly committed to its customers and to ensuring a fair and competitive market place for telecoms services.