Following failed compensation payments for broadband installation delays, BT has been hit with a fine of £42 million, including an agreement to pay out around £300 million to its competitors. The fine has been recorded as the largest ever imposed by telecoms watchdog Ofcom, with shares in BT dipped by 1.5 per cent at the open.
According to an investigation, between January 2013 and December 2014, BT’s Openreach subsidiary had “misused” contract terms to mitigate the compensation that was owed to other firms for the failure of timely delivery of ethernet broadband services. Openreach, owner and operator of the majority of the UK’s telecoms infrastructure, acknowledged the findings and “wholeheartedly” apologized for the transgression.
A majority of the UK’s internet providers, such as TalkTalk, Sky, and Vodafone, run their services on telecoms infrastructure owned by Openreach. According to the so-called communications providers’ agreement of infrastructure use, Openreach must maintain and update connections. Upon failure/delay to do so, it becomes liable to pay penalties to the firms.
BT chief executive Gavin Patterson 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.
As a result of BT admitting its liabilities and agreeing to compensate its communication providers in full, Ofcom has provided a 30 per cent discount (£18 million) to the fine.
Today’s fine becomes the third of such penalties imposed by Ofcom over the last few months. In January, mobile subsidiary EE was fined £2.7 million for overcharging customers, and last week, cut-price internet provider Plusnet was hit with a £880,000 fine for charging customers after they had canceled contracts. BT has not yet calculated the final costs to be paid to firms, but currently, its estimate stands at £300 million.
According to Openreach boss Clive Selley, since he established the firm in February 2016, the BT subsidiary had “made improvements”. He also said:
We will make sure the same mistakes aren’t repeated in the future. This shouldn’t have happened and we fully accept Ofcom’s findings.
Ofcom also fined BT £300,000 more for failing to provide “accurate and complete information under the Communications Act 2003”. Although BT didn’t agree with all of these findings specifically, it still maintained that it agreed to “accept it in the interests of reaching a swift and final resolution”.
