Telefónica fined for 'unfair' penalty charges against rival operators

SPAIN'S main telecommunications giant has been fined €5 million for claiming line breakdowns were 'false' when these went through a rival operator, and charging a fee.

The National Markets and Competition Commission (CNMC) says Telefónica – Spain's answer to BT – violated an agreement known as the Retail Offer for Subscriber Access Loops (OBA), which regulates relations between Telefónica and its competitors when the latter rents the lines to provide services to its own clients.

Telefónica owns all the landline phone lines and broadband internet in Spain, meaning if customers use another network operator, this operator has to pay Telefónica a rental fee to be able to offer the service.

The OBA covers, among other aspects, the amount other operators have to pay to rent the line – referred to as the 'Access Loop' – plus length of time the non-Telefónica networks retain control of the line on behalf of their customers, how breakdowns and other faults are managed, and penalty charges.

Telefónica refused to take responsibility for the majority of breakdowns affecting lines rented by other operators between January 2014 and October 2015 inclusive, says the CNMC, claiming the requests for repair services made by the other networks to Telefónica were 'false', or outside Telefónica's control and were caused by the rental operator.

After carrying out the line fault repairs, Telefónica passed on a penalty fee of €26.12 per telephone to the other operators.

A 'false breakdown' may only be declared under very restricted circumstances which must be proven and clearly documented.

Between 53.8% and 78.2% of these were not proven, potentially costing rival operators millions of euros and giving a poor impression of them to their customers.

Already in December 2013, due to ongoing conflict between Telefónica and other operators renting the lines, the CNMC ordered the former to reduce its 'false breakdown' penalty charge by 75%, from its original €104.48.

According to the CNMC, directly after this, the number of line faults declared 'false' suddenly shot up.

Telefónica has expressed its 'categoric denial and condemnation' of the accusations and the €5m fine it has been ordered to pay, and says it will appeal via the National Court.

It says the CNMC refers to no more than 100 so-called 'false breakdowns' out of a total of 700,000 – around 0.014% - which is 'evidently insufficient' to be able to 'extrapolate the results to the firm's policies as a whole'.