Yahoo Finance BT fined £42m by Ofcom for 'serious breach' of rules in largest penalty ever imposed by the regulator
BT has been fined £42m by the communications regulator for a "serious breach" of rules, in the largest fine ever imposed on a telecoms provider.
Ofcom conducted an investigation into Openreach, the arm of BT that develops and maintains the telecoms network in the UK which is used by other telephone and broadband providers.
It found BT had misused the terms of its contracts to cut compensation payments for delays in connecting high-speed business lines, known as ethernet services, to other telecoms providers. Such lines provide connections for schools, hospitals and libraries as well as businesses.
Ofcom found that Openreach wrongly assumed major wholesale customers had agreed to installation delays. The investigation was triggered by a complaint by Vodafone, which relies on BT ethernet services to connect its mobile masts.
It is estimated that BT, which has admitted failings, will also have to pay £300m in compensation to its rivals.
The £42m fine is by far the highest ever levied by Ofcom. The next highest telecoms fine was a £3.7m fine imposed on Vodafone last year.
BT's share fells 1.5pc in morning trade.
BT to be fined £42 million by Ofcom for breaching contracts with telecoms providers https://t.co/ejsO5qhYil
— Ofcom (@Ofcom) March 26, 2017
Gaucho Rasmussen, Ofcom’s Investigations Director, said: “These high-speed lines are a vital part of this country’s digital backbone. Millions of people rely on BT’s network for the phone and broadband services they use every day.
“We found BT broke our rules by failing to pay other telecoms companies proper compensation when these services were not provided on time.
"The size of our fine reflects how important these rules are to protect competition and, ultimately, consumers and businesses.
"Our message is clear – we will not tolerate this sort of behaviour.”
Ofcom rules mean that BT must pay compensation to wholesale customers like Vodafone and TalkTalk for late delivery of ethernet services.
If BT takes longer than the contracted time to deliver the services, then in some circumstances it can assume the customer has agreed to an extension - something known as "deemed consent".
But the regulator found that between January 2013 and December 2014, BT had done this "retrospectively over a sustained period", to reduce the amount of compensation owed.
Clive Selley, CEO of Openreach CEO, apologised and said improvements had been made to ensure the same mistakes were not repeated in the future.
Gavin Patterson, BT Group Chief Executive said the investigation had revealed "we fell short of the high standards we expect in serving our Communications Provider customers".
“We take this issue very seriously and we have put in place measures, controls and people to prevent it happening again," he said.
BT has also been fined an additional £300,000 for failing to provide information to Ofcom.
The company said it "does not agree with all elements of this particular decision, but has decided to accept it in the interests of reaching a swift and final resolution".
The £42m fine incorporates a 30 per cent maximum reduction to reflect BT's admission of full liability and agreement to compensate those affected.
