TalkTalk Threaten Openreach Over Compensation
A fight looks to be on between TalkTalk and BT over the now-independent Openreach company, which could hold up a vital consultation regarding the future of the UK’s broadband infrastructure.
In March, the telecoms regulator Ofcom imposed a record breaking fine on BT for widescale broadband installation failings between 2013 and 2014, to the tune of £42m in direct fines. At the same time, BT Openreach were ordered to pay out £300m in compensation to communications providers like TalkTalk, Vodafone, Sky and Virgin who relied on BT Openreach’s appalling service.
TalkTalk, who have struggled since the crippling hacks brought them to their knees in 2015, had imagined that they’d be in line for around £60m to £70m in compensation. However, it’s understood by City A.M that they’ve received an offer in the “mid-teens” of millions by Openreach.
That’s an unacceptable sum for TalkTalk, who have seen record numbers of customers abandon them via the TalkTalk contact line after numerous scandals and constant failings on Openreach’s behalf when it came time to connect up new customers.
Vodafone has opened talks with Openreach about their offer, whilst Sky (the biggest broadband provider in the UK) has yet to receive an offer from Openreach.
Earlier in the month, Openreach launched a consultation asking broadband providers like TalkTalk how best to deliver universal broadband coverage for the UK, but these disagreements could put talks on hold, and potentially put Openreach behind schedule.
The issue is said to be that the methodology for calculating compensation isn’t paid based on market share. Instead, it’s based on the number of lines ordered by ISPs, the number of times “deemed consent” was applies, and the rental cost of the lines.
A spokesperson for Openreach reiterated its apology to ISPs, adding: “We will compensate all of the affected Communications Providers outside of BT in full, within twelve months.
“Our settlement offer reflects Ofcom’s findings and methodology, and we are contacting those affected this month.”
An Ofcom spokesperson said: “We expect all parties to engage constructively in the compensation process.”
In response, TalkTalk’s largest shareholder, Sir Charles Dunstone, said what BT had offered as its share of the £300m was “significantly less” than what they were expecting, saying: “We can’t reconcile the £300m that they say it is going to cost them… Everything that we can see doesn’t seem to add up to a share of £300m.”
For customers, it’s unclear what the compensation will mean. TalkTalk already moved to compensate customers who were affected by the hack, offering free TV, mobile and broadband to all customers.
It’s suggested, therefore, that the compensation will be fed back into the company. They’ve been struggling as of late, despite a relaunch with simplified and cheaper plans for customers, and a significant cash injection could be just the ticket for seeing out the financial year in good health.