UK communications watchdog Ofcom is planning to force BT to pay out more compensation to its wholesale customers for failing to meet requirements.

In its annual review of BT’s regulatory compliance, Ofcom expressed concern at the performance of the incumbent carrier’s Openreach division.

As a result, the regulator has proposed BT makes greater compensation payouts, and more frequently.

The watchdog said BT should pay compensation proactively, without any need for Openreach customers to make a claim. BT should also pay out every time service or quality falls below the contractual threshold and should continue to pay compensation each time problems persist with no limits to the amount. Ofcom has also proposed that BT pay double the amount of compensation for failure to activate ‘live’ lines.

The proposed compensation scheme will apply to all Openreach customers, including BT retail, which rent capacity on the carrier’s national fixed network.

Ofcom chief executive, Ed Richards, said: “The UK now has one of the most competitive markets anywhere in the world. To build on this progress, we want to ensure that Openreach has very clear incentives to deliver consistently high quality service to all of its customers. These measures will benefit all business and residential consumers and all competitive communications providers that use BT’s network.”

Richards said Openreach has made “real progress” but added that further action can offer benefits to UK consumers.

As a result of the Telecoms Strategic Review, UK consumers are already benefiting from average broadband prices that were down by two thirds in 2006, compared to 2005; More choice, with 60 per cent of UK consumers able to choose between four or more providers; And increased competition – in 2006, 8 per cent more customers switched fixed telephone line and 5 per cent more customers switched broadband provider than in 2005.