BT fined record £42m by Ofcom in compensation row

BT has been fined a record £42 million for a 'serious breach' of its rules for failing to pay full compensation to rival firms for late connections to its infrastructure.

BT provides the network that its rivals use  and has been fined over delays in connecting them to its infrastructure

The investigation found that BT misused the terms of its contracts to reduce compensation payments owed to other telecoms providers for failing to deliver “Ethernet” services on time.

The regulations breached by the firm, which owns the network of internet cables through its Openreach arm, address the company’s “significant market power” and are designed to ensure that BT does not have an unfair competitive advantage over its peers.

Dan Howdle, consumer telecoms analyst at broadband advice site Cable.co.uk, said: “Today’s ruling offers insight into just some of the factors contributing to Ofcom’s decision to split BT and Openreach into two separate entities.

“Clearly, being the sole owner of shared infrastructure has given rise to precisely the sort of conflict of interest of which BT has long been accused. Customers must never be allowed to become collateral damage in the battle to gain the upper hand in the market.”

Last year, Ofcom fell short of recommending a full break up of BT and Openreach, but said BT and Openreach should be split into two entirely independent companies. It came to an agreement with the firm over how this should be implemented earlier this month.

Ofcom opened the investigation into the breach, which took place between January 2013 and December 2014, shortly after Vodafone brought allegations to Ofcom that BT had misused its contractual terms through the late delivery of Ethernet services without Vodafone’s consent, and by failing to compensate the company for these delays. In addition to the fine, it will also have to compensate all the telecoms providers who faced financial loss because of its conduct within 12 months.

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. Our message is clear – we will not tolerate this sort of behaviour.”

Openreach chief executive Clive Selley said: “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.”