TalkTalk have been breaking records, but for all the wrong reasons

Ofcom have issued the largest fine that they have ever enforced on a telecoms provider as TalkTalk and its Tiscali UK subsidiary have been fined £3m for incorrectly billing more than 65,000 customers for services they had not received.

The punishment follows an investigation into the two businesses that started in July 2010 as a result of more than 1,000 complaints.  TalkTalk blamed the billing errors on the amalgamation of the Tiscali UK business following their purchase of Tiscali UK in 2009.

In its ruling, Ofcom said, the telcoms company had wrongly issued bills to 62,000 customers, in particular those who had closed accounts, between 1 January and 1 November 2010. In April this year, Ofcom said that TalkTalk was the most complained about telecoms firm for landline and broadband services.

TalkTalk has since paid more than £2.5m in refunds and goodwill payments to affected customers.

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Ofcom Demand Rural Broadband Pricing Should Be Cut

The digital divide between town and country looks to be shrinking, as Ofcom rule that BT have to cut wholesale pricing.

Currently, BT is the only operator with equipment in many of the smaller telephone exchanges, meaning that other ISP’s have to factor ‘renting costs’ into their pricing plans.  The result is that customers often miss out on cheaper deals available in towns and cities.

In cities, many ISPs, other than BT, are able to offer consumers cheap broadband through a system known as local loop unbundling (LLU), where they place their own equipment in the exchange.  This is deemed ‘less economical’ in many rural areas, resulting in pricing being affected by the renting costs. 

As competition rises, this could be great news then for rural customers; however, the telecoms regulator has not applied the reduced charges ruling to ADSL2+, a next-generation copper-wire technology which offers speeds of up to 24Mbps.  The hope is that BT focus on investing in the new technology. 

The pricing changes should begin from mid August, and under the ruling BT must cut its rates by 12% below inflation per year until March 2014.

In the meantime, Fujitsu is bidding for government money to create a fibre network for rural areas. Both Virgin Media and TalkTalk have said they will offer services on it if the bid is successful.

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TalkTalk Pays Millions in Compensation

As consultants in the Telecoms industry, we regularly see elements of bad practice from suppliers.  For example, we recently came across a situation where unreasonable connection charges were hidden within the terms and conditions of a suppliers contract.

However, it is a case of bogus billing that has taken to the headlines this week.  Industry regulator Ofcom launched an investigation in July 2010, following more than 1,000 complaints from customers who received aggressive demands for the payment of bills they did not owe.

As a result, two telecoms firms, TalkTalk and Tiscali, have repaid nearly £2.5m to customers in compensation, amounting to an average of £40 per customer. 

TalkTalk put the problems down to a new billing system introduced after it bought Tiscali in June 2009.  Following the complaints, Ofcom have confirmed that the two firms, who together have 4.2 million customers, have now taken steps to fix the problem.