Ofcom fines BT record £42 million for ‘serious breach’ of rules

Ofcom has fined BT a record £42 million for a ‘serious breach’ of the regulators rules on Ethernet installations for rival firms.

The fine is the result of an investigation into the Openreach branch of BT, which runs the UK’s entire broadband infrastructure.

According to the telecoms regultator, BT “misused the terms of its contracts” to reduce compensation payments to rival firms between January 2013 and December 2014, after failing to deliver ‘Ethernet’ services on time.

Related: What does the Openreach split mean for you?

BT, which will also be fined £300,000 for “failing to provide information to Ofcom,”  has responded to the ruling, saying it accepts the results of the investigation and “apologises wholeheartedly.”

The investigation was launched after rival firm Vodafone came to Ofcom in 2015 to allege BT had not only failed to deliver Ethernet services on time, but had also failed to compensate the company for these delays.

Ofcom logo

Ofcom rules require BT to install Ethernet services to its wholesale customers, i.e. other companies, and compensate those companies for any delays.

As the regulator explains in a statement: “If BT encounters problems that require more time to resolve, in certain circumstances it can assume that a customer has agreed to an extension.

“But Ofcom found that BT did this retrospectively over a sustained period, to reduce the level of compensation it owed to telecoms providers.

“Not only did this harm other telecoms companies, but it was also likely to have harmed the UK businesses and consumers who rely on high quality, high-speed, broadband services every day.”

BT estimates it will have to pay a further £300 million compensation as a result of the ruling.

Openreach CEO Clive Selley told The Guardian: “We apologise wholeheartedly for the mistakes Openreach made in the past when processing orders for a number of high-speed business connections.

“This shouldn’t have happened and we fully accept Ofcom’s findings.”

The company now has 12 months in which to compensate other telecoms providers affected by its failure to deliver Ethernet services on time

That’s on top of the £42 million penalty, which incorporates a 30% reduction to reflect BT agreeing to accept full liability, and to set up a compensation scheme.

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’s ruling comes after the regulator reached an agreement with BT earlier this month to legally separate the company from its Openreach subsidiary.

The agreement will mean Openreach will soon become a distinct company with its own staff and management

The split follows numerous complaints from competitors and commentators who have accused BT of abusing its monopoly, arguing that the company underinvests in broadband infrastructure, and charges over the odds for services.

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Let us know what you think of the fine in the comments.