On 26 March 2017, Ofcom (the UK telecommunications regulator) fined BT a record breaking £42 million for irregularities in compensation payments that should have been made to customers of its network arm, Openreach. BT is also required to compensate all the affected customers within 12 months, these compensation payments will amount to approximately £300 million.
The application of such material financial penalties is unprecedented in UK telecommunications regulation and is, arguably, indicative of a change in Ofcom’s approach in this area. This fine is by some distance the largest ever levied by Ofcom. When it is combined with the scale of the Ofcom mandated compensation payments, the complete remedies package is one of significant punitive force. The Financial Times referred to the scale of overall financial penalties levied by Ofcom in this case as “unprecedented in UK telecoms.”
However, moves towards such an approach at Ofcom have, arguably, been developing over the past year to eighteen months at least, with the publication of Ofcom’s new penalty guidelines and a number of high-profile fines. Moreover, this development arguably follows a broader trend among UK regulators towards regular, substantial and highly publicised applications of their enforcement powers. For example, such an approach has been prevalent at Ofgem, the energy market regulator for a number of years.
Whether such an approach will have the desired effect of improving compliance and deterring recidivism in respect of regulatory breaches is open to debate. Practically, however, it seems that those active in telecommunications markets will need to deal with the reality of a regulator willing to take a more adversarial and punitive approach to regulatory enforcement.