UK regulator Ofcom has slapped BT with a £42 million fine after its Openreach division failed to provide adequate compensation for late installations.
The record fine was handed out after Openreach misused the terms of its contracts to reduce the compensation payments it owed to other providers for failing to deliver Ethernet services on time.
The fine includes a 30 percent reduction for BT’s admission of full liability and its agreement to set up a scheme to compensate the likes of Sky, Vodafone and TalkTalk.
BT must compensate its customers within 12 months.
Openreach is obliged to deliver the Ethernet services to rivals and to pay compensation if the services are not delivered in 30 days.
There are exemptions to this rule if Openreach encounters problems that take more time to resolve.
However, Ofcom’s investigation found that BT retrospectively took advantage of this rule to reduce the amount owed to other companies over such delays.
The complaint was originally raised by Vodafone in late 2015, with the investigation beginning in November of that year.
The breach took place between January 2013 and December 2014.
BT was hit with a further £300,000 fine for failing to provide accurate information to Ofcom during the investigation.
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.
“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.”
Gavin Patterson, BT CEO, 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.”
Openreach is beginning the process of legally separating from BT after the operator reached an agreement with Ofcom earlier this month.
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.”
Selley said that this area had been monitored “very closely” since he became Openreach CEO in February 2016 and that the company would ensure the same mistakes did not occur again.
The new Ofcom fine is a further regulatory blow for BT, whose subsidiary EE was fined £2.7 million in January for overcharging tens of thousands of customers in 2014 and 2015.
Plusnet, also owned by BT, was handed a £880,000 fine in March for continuing to charge a group of customers after they had cancelled their contract.
Meanwhile, BT said it had appointed David Wallace, formerly of software company Oracle, to head up its public sector business in Scotland.