BT fined for breaking Ofcom rules in Northern Ireland tender

BT fined for breaking Ofcom rules in Northern Ireland tender Add to Your Pages

11 December 2020

BT failed to meet regulatory obligations during procurement for major public sector telecoms services contract in Northern Ireland

BT's network arm did not provide the same network information to bid teams from BT and Eir during the 2017/18 tender

BT has admitted it broke the rules and has entered into a settlement agreement with Ofcom

Ofcom has today fined BT £6.3m after its network division failed to give a rival company the same information as BT's own bid team during the tender for a public sector telecoms contract in Northern Ireland in 2017/18.

The penalty is the result of an investigation into a complaint made to Ofcom by telecoms company Eir. The complaint related to BT's conduct during the tender for a high-value contract to provide essential telecoms services to public sector organisations in Northern Ireland.[1]

Under Ofcom rules, BT's network arm must treat all its wholesale customers equally. Most telecoms companies including BT's own customer-facing business rely on access to BT's network to provide their services.[2]

Our rules are designed to address competition problems that might otherwise arise from BT's significant market power' and to ensure a level playing field, on which other providers can compete with BT.[3]

Between April 2017 and March 2018, BT and Eir both bid for the Northern Ireland public sector shared network' (NIPSSN) contract. This was to provide shared data transfer services and calls to over 150 public sector organisations in Northern Ireland across 2000 sites, including schools, the police, Government departments, local councils and other public bodies.

The part of BT's network arm 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. In June 2018, BT's bid team won the contract.

What Ofcom's investigation foundOne 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.[4]

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.[5]

Financial penaltyWe recognise 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.

As a result of these findings, Ofcom has imposed a penalty of £6,300,000 on BT. The penalty incorporates a 30% reduction to reflect BT's agreement to settle Ofcom's investigation by admitting full liability. Openreach and BT have cooperated with our investigation.

Gaucho Rasmussen, Ofcoms 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.

NOTES TO EDITORS

The value of the nine-year contract ranged from £50m to £400m, reflecting potential future changes in scale and scope.

At the time of this tender, the products and services that Openreach provided in Great Britain were delivered in Northern Ireland by BT Northern Ireland Networks' (BTNIN).

We have found that BT breached SMP Condition 5' of the Fixed Access Market Review 2014. This condition requires BT to provide network access on an Equivalence of Inputs' basis.

We have not made any findings on whether this affected the outcome of the tender process.

These failures occurred before the formal legal separation between BT and Openreach had taken place.

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