BT hit with £42m fine for Ethernet compensation delays to competitors

Updated BT has been smacked with a £42m penalty for its failure via Openreach to compensate other telecoms providers for delays to fixing leased line "Ethernet" services, in a decision from Ofcom today.

As a result of the investigation, BT said it estimates it will pay an additional £300m in compensation to the affected communications providers.

The investigation found that, between January 2013 and December 2014, BT misused the terms of its contracts to reduce compensation payments owed to other telecoms providers.

It found BT breached rules that address the company’s "significant market power" adding "this market power comes from the fact that most telecoms companies rely on access to BT’s network to provide services such as broadband to their customers".

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

Earlier this month both parties agreed to the terms of a legal split, after two years of wrangling.

Howdle said: "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."

Ofcom said its rules are fundamental in ensuring BT does not act in a way that could harm competition, consumers and businesses.

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.

He said the size of the fine reflects how important Ofcom's rules are to protecting competition, consumers and businesses. "Our message is clear – we will not tolerate this sort of behaviour.”

BT has admitted failings, and agreed to compensate the companies affected.

Ofcom opened 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.

BT will also be fined £300,000 for failing to provide information to Ofcom. ®

Updated at 11.08 GMT to add: Clive Selley, Openreach CEO, 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.

“Since I became CEO of Openreach in February 2016, we have monitored this area very closely, we have made improvements to how we process and deliver such connections, and we will make sure the same mistakes aren’t repeated in future.

“This issue is unrepresentative of the vast majority of work conducted by Openreach and we are committed to delivering outstanding service for our customers.”

Gavin Patterson, BT Group chief executive said: “The investigation into historical Deemed Consent practices at Openreach revealed we fell short of the high standards we expect in serving our Communications Provider customers.

“We take this issue very seriously and we have put in place measures, controls and people to prevent it happening again.

“My management team and I are determined that BT applies the highest standards when serving our customers.”