The broadband provider, BT, is being fined £42 million by Ofcom and will be expected to pay £300 million its corporate customers.
This is a result of the provider misusing the terms of its contracts to cut compensation payments for delays in connecting high-speed business lines.
Ofcom has said this fine it is the largest it has ordered and represents a big statement of intent to other broadband providers.
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Andrew Ferguson, editor of thinkbroadband.com, said in response to this news that “the £42m fine is substantial, and could have been 30% higher if BT had not agreed to take full liability. The full amount this mistake will cost the BT Group is unknown, as a compensation scheme will be created for the companies buying Ethernet services that were affected by the installation delays.”
Ofcom issued the fine after discovering that BT’s Openreach arm had cut compensation to telecom providers for delays in installing high-speed business lines between 2013 and 2014.
It found BT had broken rules, which were designed to counter its “significant market power” by cutting payments.
Gaucho Rasmussen, Ofcom’s investigations director, said: “These high-speed lines are a vital part of this country’s digital backbone.”
“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.”
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In response to the results of the investigation, Openreach’s chief executive Clive Selley, “apologised wholeheartedly” for the mistakes. said the firm “apologised wholeheartedly” for the mistakes.
The investigation found the provider failed to pay full compensation to providers when it was late installing ethernet lines used by large organisations to transmit data.
Commenting on this, Ferguson said “ethernet and leased line services are the core of the business broadband world and is an area where BT Group is facing increasing competition and regulatory pressure to reduce the price it charges. However, if standards slip as they did between Jan 2013 and Dec 2014, fines like this are the result and it seems Ofcom is ready to act as regulator with a big stick.”
Under current rules, BT has 30 days to install these high-speed lines, unless “appropriate notice” is given.
In the time period between 2013 and 2014, Ofcom established that this notice was not given, hence the large fine.
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“We have found in our investigation that that notice was not always appropriately provided and that BT would go back in time to try and justify its delay to avoid paying compensation,” said Rasmussen.
“We have powers to compel companies to provide us information and it’s important that that information is provided to us both on time and in complete manner.”
“We found that sometimes there were delays, sometimes information was incomplete and that obviously has an impact on how quickly we can do our job.”
