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Standard User Spud2003
(fountain of knowledge) Fri 21-Dec-12 19:48:37
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BT Ordered to Pay £95m to Rivals


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BT ordered to pay £95m to rivals it overcharged for FIVE years - Backhaul rates unjustified, rules Ofcom

BT overcharged its rivals £95m between 2006 and 2011 - and will pay the excess back to TalkTalk, Virgin Media and others following an Ofcom probe.

There were three investigations in total: one was triggered by Verizon UK, another by Cable & Wireless and the third by an aggregation of ISPs including TalkTalk and Sky.

They all claimed that since April 2005 BT overcharged for its Backhaul Extension Service (which connects unbundled exchanges to an ISP's network) and Wholesale Extension Service (connecting bits of the network together), both of which are provided by BT for a one-off fee and ongoing rate, and it's this rate that Ofcom feels was exceeded.

Not that the communications watchdog jumped to that conclusion; its investigation started in September 2010 and involved appeals and counter appeals as well as additional evidence from BT as it sought to justify the charges.

And it's not over yet.

"We are disappointed with Ofcom's determination that we overcharged," the national telco told us in a statement. "We are considering all options available other us, including appealing."

Ofcom issued a draft decision eight months ago, and this final ruling is much the same so it isn't that much of a surprise. BT is keen to point out that it has the money stashed away just in case it loses or decides against prolonging the process any further

http://www.theregister.co.uk/2012/12/21/bt_overcharges/


tongue
Standard User Bob_s2
(committed) Fri 21-Dec-12 20:43:08
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Re: BT Ordered to Pay £95m to Rivals


[re: Spud2003] [link to this post]
 
Probably not the only case of overcharging. THis is the problem you get when their is no proper seperation of the BT companies.

BT Wholesale & BT Openreach should be split off into seperate companies. You then have proper seperation of costs etc. THey can remain BT owned but would be companies in their own right. BT Retail would then have to buy capacity and services off of these companies on the same basis as an other Teleco or ISP.
Standard User GMAN98
(experienced) Fri 21-Dec-12 21:43:55
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Re: BT Ordered to Pay £95m to Rivals


[re: Bob_s2] [link to this post]
 
BT Retail have to do that now, you need to read up more


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Standard User Bob_s2
(committed) Fri 21-Dec-12 22:53:58
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Re: BT Ordered to Pay £95m to Rivals


[re: GMAN98] [link to this post]
 
No they do not. THey are structureds as an internal BT business unit and not a seperate company. There is a lot of difference
Standard User XRaySpeX
(eat-sleep-adslguide) Sat 22-Dec-12 00:16:11
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Re: BT Ordered to Pay £95m to Rivals


[re: Bob_s2] [link to this post]
 
But see OFCOM Regs, even if they are divisions of same firm.

1999: Freeserve 48K Dial-Up => 2005: Wanadoo 1 Meg BB => 2007: Orange 2 Meg BB => 2008: Orange 8 Meg LLU => 2010: Orange 16 Meg LLU => 2011: Orange 19 Meg WBC
Standard User GMAN98
(experienced) Sat 22-Dec-12 09:29:12
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Re: BT Ordered to Pay £95m to Rivals


[re: Bob_s2] [link to this post]
 
As I said, suggest you read up on the subject you are wrong, very wrong
Standard User Bob_s2
(committed) Sat 22-Dec-12 09:37:52
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Re: BT Ordered to Pay £95m to Rivals


[re: GMAN98] [link to this post]
 
No you are incorrect. BT OPenreach & BT Wholsale are not seperate BT companies they are just internal BT business units. With such a structure it is quite easy to move costs around. THe large companies that were in the news recently over corporation tax use a similar business structure to BT to move costs around with internal transfer pricing. THe accounts can be compplex so for instance they can load a lot of corporate costs onto Openreach to inflate costs. If they are seperate companies you cannot do that.
Standard User Gadget
(committed) Sat 22-Dec-12 10:01:12
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Re: BT Ordered to Pay £95m to Rivals


[re: Bob_s2] [link to this post]
 
Whilst Openreach is part of BT Group it is specifically required to produce its own individual report and accounts http://stakeholders.ofcom.org.uk/binaries/telecoms/p... (see section 5.30), It is also required to charge other parts of BT the same as an other operator, to use the same systems to order and maintain goods and services provided to other parts of BT as it does for any other operator and to provide the same pricing terms to other parts of BT as it offers to any other operator.
So it has separate report and accounts, obligations to provide equivalence of service and pricing and is overseen by a separate Equivalence of Access organisation (section10 of the above doc) as well as ultimately, Ofcom. In all pratical respects other than name it is operated as a separate company.
Standard User Bob_s2
(committed) Sat 22-Dec-12 10:05:49
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Re: BT Ordered to Pay £95m to Rivals


[re: Gadget] [link to this post]
 
You can stiil move cost around and it can be very hard to identify that when they are all a part of the same company. and whether those costs are reasonanle or not. For example BT OPenreach will have to pick up BT Group corporate costs,

There is a lot of scope for moving costs around in such a group structure which is why most large corporates use it. If you have seperate companies you have total clarity of costs
Standard User GMAN98
(experienced) Sat 22-Dec-12 10:09:10
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Re: BT Ordered to Pay £95m to Rivals


[re: Bob_s2] [link to this post]
 
You said this:-

In reply to a post by Bob_s2:
BT Retail would then have to buy capacity and services off of these companies on the same basis as an other Teleco or ISP.


I'm saying that already happens. Ofcom mandate it. Read up on

"Equivalence of Inputs"
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