UK Edition
BT offered staff iPads to encourage reduced compensation payouts
BT offered staff free iPads to encourage them to exploit a loophole and avoid paying compensation for installation delays, an investigation has revealed.
Company emails released by Ofcom, the telecoms regulator, show that a manager at Openreach offered field staff the incentive as part of a plan to abuse the “deemed consent” regime and save money.
The system was set up so Openreach would not be liable to compensate customers for delays to new high-speed ethernet connections for reasons beyond its control, such as bad weather.
As it struggled to cope with demand under chief executive Liv Garfield, who is now in charge of the water company Severn Trent, however, it abused deemed consent by applying it wrongly and retroactively to avoid paying £300m in compensation to rivals such as Vodafone.
Other telecoms operators rely on Openreach’s ethernet services to connect mobile masts to their networks, for instance.
Now it has emerged that the engineers and job managers who manipulated the “deemed consent” system most were in line for rewards from BT.
They were told in June 2013 that the company wanted to reduce the number of delayed installations where compensation was due by 200 per week because it was “a financial drain on our business”.
Each week staff hit targets they would be entered into a prize draw to win one of six iPad Minis.
They were also told: “If you are recognised by your manager or colleague, or you recognise a colleague as doing great work and going the extra distance to help deliver the ethernet number, then the great work can win an additional entry into the weekly prize draw.”
In its investigation, Ofcom found that the prize draw was intended “to encourage and reward teams for retrospectively applying deemed consent to orders”, allowing Openreach to reduce its installation backlog and pay less compensation. Deemed consent was abused by BT to reduce the bill “rather than by improving its quality of service”, the regulator found.
The prize draw was part of a broader “ethernet recovery plan” that included legitimate actions to reduce the backlog but also oversaw the abuse of deemed consent. The issue was important enough that a “war room” was set up to coordinate efforts from an Openreach building at Blackfriars in London.
Ofcom said: “The teams and groups that were involved in applying deemed consent retrospectively were not free agents or operating independently.
“Rather, their activities amounted to deliberate conduct reflecting BT’s strategy for reducing the level of its [compensation] payments.”
As well as a £300m compensation bill, Ofcom has fined BT a record £42m over the affair. Its report reveals that frustration with the company’s response influenced the penalty. Regulators sent Openreach nine requests for information, only four of which were answered within the deadline.
Openreach, which now has new management and is more independent from BT, has apologised and accepted Ofcom’s findings. The abuse of deemed consent took place in 2013 and 2014. Current chief executive Clive Selley, who took over last year, has pledged it will not happen again.
News of the investigation comes just a day after The Sunday Telegraph revealed that hundreds of thousands of BT pensioners, including current and retired Openreach employees, are in line to have their retirement pots capped as the telecoms giant battles a massive black hole in its £50bn fund.
BT is appealing to the fund’s trustees and unions to agree to end accruals in its defined benefits scheme, the UK’s largest private sector pension fund, with more than 300,000 members.