Telecoms regulator Ofcom has imposed a record fine of £42m on BT for a 'serious breach' of the rules governing the provision of Ethernet services to other telecoms companies.
The case involves BT's Openreach arm, which is responsible for managing the copper and fibre cables and supporting infrastructure that provide telephone and internet services to almost all homes and businesses in the UK. Rival firms depend on this infrastructure to supply their own services, and there have been many complaints that BT has been too slow in rolling out these services.
Prompted by an initial complaint by Vodafone that Openreach had failed to compensate it for late delivery of Ethernet cables, an Ofcom investigation found that between January 2013 and December 2014 BT had commited a "serious breach" of the terms of its contracts in order to reduce compensation payments to its rival operators.
"We found BT broke our rules by failing to pay other telecoms companies proper compensation when these services were not provided on time," said Gaucho Rasmussen, Ofcom's investigations director in a statement.
"The size of our fine reflects how important these rules are to protect competition and, ultimately, consumers and businesses," he added.
"Our message is clear we will not tolerate this sort of behaviour," Rasmussen said.
The penalty includes a £300,000 fine for BT's failure to provide complete and accurate information to Ofcom during its investigation.
In addition to the penalty BT is required to pay compensation payment to other providers, which it estimated would be around £300m.
In a statement Openreach CEO Clive Selley apologised for the firm's "mistakes".
"This issue is unrepresentative of the vast majority of work conducted by Openreach and we are committed to delivering outstanding service for our customers," he said.
BT Group CEO Gavin Patterson said that the Ofcom investigation "revealed we fell short of the high standards".
"We take this issue very seriously and we have put in place measures, controls and people to prevent it happening again," he said.
Earlier this month it was announced that Openreach will become a separate business following pressure from Ofcom and industry rivals. It will be a fully independent entity within the wider BT Group with sole focus on managing the fibre and copper broadband infrastructure.
However, BT will still legally be the owner of the company and set the budget Openreach is given each year.
A newly strident Ofcom has also suggested that broadband subscribers should receive automatic compensation for missed engineer appointments and slow broadband repairs, another common complaint levelled against BT Openreach.
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