Member Article

Ofcom to fine BT £42m for contract breaches

BT will be fined £42m for a serious breach of Ofcom’s rules, after the company reduced compensation payments to other telecoms providers for late installations.

The penalty is a result of an investigation by Ofcom into BT’s network arm, Openreach.

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 for failing to deliver ‘Ethernet’ services on time.

Ethernet services are the most common type of ‘leased lines’ - dedicated, high-speed cables used by large businesses, and mobile and broadband providers, to transmit data. These lines also provide vital, high-capacity links for hospitals, schools and libraries.

Ofcom has taken enforcement action because BT breached rules that address the company’s ‘significant market power’.

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. Ofcom’s rules are therefore fundamental in ensuring BT does not act in a way that could harm competition and, ultimately, 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.

“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.”

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