BT fined record £42m fine for delayed installations

The telecoms regulator has imposed a record £42m fine on BT for "serious failings" at its Openreach division, with the telecoms firm also facing a £300m compensation bill.

Ofcom said Openreach, which is responsible for the UK's broadband network, breached its rules by failing to pay other telecoms firms, such as Vodafone and TalkTalk, proper compensation over delays in installing high-speed ethernet lines.

Ethernet lines are used by large businesses and broadband providers to ensure fast services and was said by the regulator to "underpin the UK's communications infrastructure".

The investigation into BT's conduct was launched after concerns were flagged by Vodafone that it had been misusing contractual terms.

Ofcom's investigations director Gaucho Rasmussen 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."

Compensation will now have to be paid to affected providers within 12 months, Ofcom said.

BT has estimated the total cost of the payments will be around £300m.

Openreach CEO Clive Selley "apologised wholeheartedly" over the incident.

"This shouldn't have happened and we fully accept Ofcom's findings," he said.

The £42m fine is almost 10 times bigger than any sanction previously imposed on a telecoms provider. It was also handed a £300,000 penalty for failing to provide information to the regulator.

Earlier this month, BT reached an agreement with Ofcom to legally separate Openreach following demands from rivals, including Sky (Amsterdam: BK8.AS - news) - the owner of Sky News - to hive off Openreach completely on competition grounds.

They had claimed that BT's infrastructure division - responsible for the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK.- favoured BT's own retail business over their own.

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Vodafone said of the fine and compensation: "We hope this ruling will encourage BT Openreach to finally drop the unacceptable practices it has used to avoid paying compensation for late delivery of fixed fibre lines, which have impacted businesses across the country as well as our own 4G roll out."

BT shares were closed 0.2% lower on Monday.

The ruling emerged as the British Chambers of Commerce released the findings of a survey which found firms across the country were being held back because of unreliable broadband connections - damaging productivity and causing "needless" delays.

Minister of State for Digital and Culture, Matt Hancock, responded: "The Government's rollout of superfast broadband is reaching thousands more businesses and homes every week, and we are introducing automatic compensation for customers who are not getting the reliable service they are promised.

"By the end of the year, 95% of homes and businesses will have access to superfast broadband and we are introducing a full fibre business broadband voucher scheme that will help businesses get the connectivity they need."