BT to Pay 342 Million Pounds for Late Network Installs for Rivals

BT Group was fined a record 42 million pounds and ordered to reimburse another 300 million pounds to competitors after an investigation found the former phone monopoly failed to adequately compensate them for broadband service delays, according to Bloomberg.

The U.K. communications regulator Ofcom found a “serious breach“ of rules in place to protect competitors who rely on BT’s Openreach network, according to a statement. The resulting penalty, dwarfing the 4.6 million pounds of fines levied against Vodafone last year, puts another blot on the record of CEO Gavin Patterson.

BT received the fine for reducing payments to companies that rely on its network when it didn’t deliver business ethernet services on time. Ofcom opened a probe into the issue in November 2015 after complaints from Vodafone, and found that BT had misused the terms of its contracts from January 2013 to December 2014. BT is allowed to assume customer permission to extend its timeline to deliver services in some cases, but Ofcom found BT did this retroactively over a sustained period to reduce the amount of compensation it had to pay for delays.

Patterson has struggled to contend with tightening regulation from Ofcom at the same time as BT faces challenges in its government and corporate outsourcing business and an accounting scandal in Italy. The rebuke over how it treats customer-competitors like Vodafone and TalkTalk Telecom sheds light on a yearlong dispute with Ofcom that resulted in an agreement this month to legally separate Openreach. Ofcom said the delays in payments hurt British customers and the introduction of speedier broadband services.

“Our message is clear, we will not tolerate this sort of behavior,“ Ofcom’s investigations director, Gaucho Rasmussen, said in the statement. The fine raises questions about the sustainability of BT’s dividend-growth plan and may affect the rules for how Openreach will provide service to BT’s rivals going forward.

“We hope this ruling will encourage BT Openreach to finally drop the unacceptable practices it has used to avoid paying compensation for late delivery of fixed fiber lines,“ Vodafone said in a statement. BT estimated the compensation it will have to pay at 300 million pounds, though the amount may change. The carrier will also pay a 300,000 pound penalty for failing to provide information to Ofcom.