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BT fined record £42 million over 'serious breach' of Ofcom rules

BT has been hit with a record £42 million fine by the telecoms watchdog and is facing compensation costs to rivals of £300 million over delayed high-speed cable installations.

Ofcom said BT's Openreach infrastructure arm committed a "serious breach" of its rules for reducing payments owed to other providers such as Vodafone.

The telecoms giant was supposed to pay compensation after failing to deliver high-speed lines to the rival companies in adequate time.

The communications regulator has rules to curb BT's "significant market power" to ensure competitiveness, including an obligation to provide the so-called Ethernet cables within 30 days.

The huge sum is the largest fine issued against a telecoms provider by Ofcom and almost 10 times larger than the previous record, a £4.6 million penalty against Vodafone last year.

Openreach said it "apologised wholeheartedly" over the incident.

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.

"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."

Compensation will now have to be paid to affected providers within 12 months, Ofcom said.

Many providers are dependant on BT's vast network to deliver services such as broadband to customers.

Ethernet lines are often used by large businesses to ensure high speed and was said by the regulator to "underpin the UK's communications infrastructure".

An investigation into BT's conduct was launched after concerns were flagged by Vodafone that it had been misusing contractual terms.

It was found Openreach had retrospectively found problems which delayed it delivering the Ethernet lines, to slash its compensation costs incurred by delays.

Ofcom said: "Not only did this harm other telecoms companies, but it was also likely to have harmed the UK businesses and consumers who rely on high quality, high-speed, broadband services every day."

An even greater fine had been averted after the company admitted full liability, knocking 30% off the overall sum.

It was fined a further £300,000 for "failing to provide information" to Ofcom.

BT said it estimated the total cost of the compensation payments would be around £300 million.

Openreach CEO 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."

Earlier this month, BT reached an agreement with Ofcom to legally separate its infrastructure arm Openreach.

It followed growing calls from rivals to hive off Openreach and in November the communications regulator ordered a legal separation of the firm.

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