BT Group (LON: BT) fined £6.3 million for breaking telecom regulations

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BT Group (LON: BT) fined £6.3 million for breaking telecom regulations

 BT Group (LON: BT) fined £6.3 million for breaking telecom regulations

Summary

  • BT failed to meet the obligations of the regulatory authority Ofcom during the tendering process of the ‘Northern Ireland public sector shared network contract’
  • The telecom major did not give competitor Eir’s bid team the same information that it provided to its own bidding team
  • Since BT admitted complete liability, its fine was reduced by a third

BT Group PLC (LON: BT), one of the leading UK-based multinational telecom company has been fined by Ofcom, the national telecom regulator, for breaking its rule of treating all its customers at par, including its own customer-facing division.

Allegation

In an announced yesterday (11 December), Ofcom charged the telecom giant a fine of more than £6 million after its network arm failed to provide Eir, a rival company with the same information as BT’s own bid team during the tender process of a Northern Ireland contract in the FY 2018.

As per the Significant Market Power rules of the Ofcom, BT is obligated to treat all its wholesale customers equally. It is to be noted that most customer-facing businesses irrespective of telecom company depend on BT’s network for extending their services, including the telecom MNC itself.

NIPSSN Tender

Both the telecom competitors (BT and Eir) had bid for the Northern Ireland public sector shared network (NIPSSN) contract between April 2017 and March 2018. The contract related to providing services like data transfer and calls to 150 public sector organisations across 2000 Northern Ireland’s sites.

The BT’s network segment that assisted Eir’s bid sat within BT's Northern Ireland Network (BTNIN). BT’s bid was given staff support from both Openreach and BTNIN. The contract was won by BT’s bid team in June 2018.

(Image Source: ©Kalkine Group 2020)

Result of the Investigation

After Eir filed a complaint, Ofcom started its investigation and found that the network arm of BT had broken rules of the country’s communications regulator to provide Eir with the same information about its FOD (Fibre to the Premises on Demand) product during the tendering process.

Eir was told that FOD was not an appropriate solution for its bid. On the other hand, the BT’s bid team was suggested that FOD was suitable for projects like NIPSSN. In short, the information provided to both the bidders on pricing and costs of the FOD product was different. 

Penalty

Ofcom has imposed a penalty of £6.3 million on BT as a result of the above findings. The penalty was reduced by 30 per cent because BT had entered into an agreement with Ofcom to settle its investigation by admitting full liability of its mistake.

Ofcom, Eir and BT’s Comments

The Director of Enforcement of Ofcom, Gaucho Rasmussen said that the network division of BT had broken the rules by failing to treat both the teams equally during the tender process. The fine imposed reflects the importance of these rules and how seriously the compliance was taken.

The regional director of Eir’s Northern Ireland business, Philip O’Meara welcomed the decision taken by Ofcom that the telecom giant BT had discriminated against Eir’s bid for the NIPSSN contract.

A spokesperson of BT Group said that the steps had been taken to ensure the same thing doesn’t gets repeated and said that they regret the level of service provided to Eir during the contract procedure.

However, BT remained focused on constantly improving the quality of service that it provides to its customers, said the spokesperson.

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