BT ordered to compensate rivals £22 million interest after overcharging for backhaul Ethernet services

BT has been ordered to dig into its pockets for the second time after a tribunal decided that interest was due on the original settlement amount in a case where the company was found to have overcharged rivals for backhaul Ethernet services.

First brought forward in December 2012, Ofcom ruled BT overcharged its rivals £95m for the five years between 2006 and 2011 – and will pay the excess back to Cable & Wireless Worldwide (now Vodafone), Sky, TalkTalk, Verizon, and Virgin Media.

A subsequent appeal by the parties to the Competition Appeal Tribunal (CAT) resulted in a decision made in June 2015 that £22 million interest was due on the amount and that BT should have been forced to pay up.

BT appealed the decision, but yesterday the Court of Appeal upheld the CAT’s judgment and declared Ofcom has power to award interest when resolving a dispute. “We will now consider the judgment in detail and assess whether we appeal to the Supreme Court,” said a spokesman for BT Openreach.

In a separate Ethernet-related case in March this year, BT was charged £42 million for the failure to compensate its telecoms rivals for delays in fixing leased line services. As a result, BT currently estimates it will need to compensate affected providers with an additional £300 million for its error.

The failures highlight the need for the separation of Openreach from BT – something which rivals have long called for. After years of legal back-and-forth and resistance, BT agreed back in March to a legal separation.

"The new Openreach will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry – not just BT,” commented Sharon White, Ofcom Chief Executive. “We welcome BT’s decision to make these reforms, which means they can be implemented much more quickly. We will carefully monitor how the new Openreach performs, while continuing our work to improve the quality of service offered by all telecoms companies.“