Ofcom to fine BT £42 million over broadband contracts

Ofcom to fine BT £42 million over broadband contracts [Image: ijeab via iStock]

Ofcom has announced it will be fining BT a total of £42 million for breaching its rules after BT reduced compensation payments to other telecoms providers for late installations.

The fine follows an investigation into BT’s network arm, Openreach, by Ofcom. The watchdog said its 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 for failing to deliver ethernet services on time.

According to its contracts, BT is obliged to install ethernet services to its wholesale customers (providers such as Vodafone and TalkTalk) and to make compensation payments for late delivery. It is required to deliver ethernet services within 30 working days, or pay compensation to the company affected.

If BT has problems necessitating more time to resolve, it can, in certain circumstances, assume that a customer has agreed to an extension. However, Ofcom said it found that BT did this retrospectively over a sustained period in order to reduce the level of compensation it owed.

Ofcom said that BT’s actions were likely to have harmed the UK businesses and consumers who rely on quality high-speed broadband services.

Large enterprises typically use ethernet services – dedicated, high-speed cables to transmit data.

Ofcom said it has taken enforcement action because BT breached rules that address the company’s ‘significant market power’. The organisation explained that BT’s market power comes from the fact that most telecoms companies rely on access to its network to provide services such as broadband. Ofcom added that this makes its rules fundamental to ensuring that BT does not harm competition, which would ultimately negatively impact on 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.

“We found BT broke our rules by failing to pay other telecoms companies proper compensation when these services were not provided on time.”