BT faces £94m in repayments for overcharging
By Stewart Mitchell
Posted on 21 Dec 2012 at 12:30
BT is facing repayments to its wholesale customers of nearly £100 million after Ofcom ruled the company had been overcharging them.
In a ruling that covers three separate complaints from a host of ISPs, Ofcom found that the prices charged by BT for its Ethernet services around five years ago were too high.
The cases date back to 2010, when TalkTalk, Sky and Virgin complained to Ofcom over pricing, while Cable & Wireless complained in 2011 and Verizon earlier this year.
We are disappointed with Ofcom's determinations and refute the finding that we have overcharged for Ethernet services
The regulator issued a “final determination” on the cases, which argues that BT will have to pay the companies back because prices did not reflect the costs of providing two of its main products at the time.
“We have concluded that BT has overcharged the parties a total of £94,823,000 for certain wholesale Ethernet services and that BT is required to make repayments for the full amounts by which it has overcharged them,” Ofcom said.
The ruling explains that Sky and TalkTalk jointly raised a dispute over pricing for BT's Backhaul Extension Services (BES), arguing that between June 2004 and July 2009 "BT had failed to comply with its obligations to ensure that its charges for BES were cost orientated".
The Virgin dispute related to Wholesale Extension Services (WES) and BES.
The ruling is in line with a draft version published earlier this year, and relates to Ethernet services that have since been taken out of service.
According to BT it may appeal the decision, but has already factored the costs of repayments into its financial plans, even though it disputed the verdict.
“We are disappointed with Ofcom's determinations and refute the finding that we have overcharged for Ethernet services,” the company said. “We are considering all options available to us, including appealing."
“We have provided evidence to Ofcom that shows we complied with our regulatory obligations and that we kept them informed of our pricing decisions throughout the period being disputed. The market for Ethernet services has grown strongly over the period and there is no evidence of economic harm to support Ofcom's findings.”
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