BT fined record 42 million pounds for
business-line installation errors
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[March 27, 2017]
(Reuters) - Britain's BT has been fined a record 42 million pounds ($53
million) by the regulator for failing to install high-speed lines for
businesses fast enough, in an error that is likely to cost the company
around 300 million pounds in compensation.
BT, which runs Britain's major telecoms network, misused the terms of
its contracts to reduce compensation payments to other providers for
failing to deliver Ethernet services on time between January 2013 and
December 2014, regulator Ofcom said on Monday.
Ofcom's Investigations Director Gaucho Rasmussen said dedicated
high-speed lines, which are used by large businesses to transmit data,
were a vital part of Britain's digital backbone.
"We found BT broke our rules by failing to pay other telecoms companies
proper compensation when these services were not provided on time," he
"Our message is clear - we will not tolerate this sort of behavior."
BT is obliged to provide access to its Openreach network to rivals such
as TalkTalk and Vodafone, but they have long complained about the
service they receive from the former monopoly.
Ofcom was considering making BT spin off Openreach in order to remove
any possible incentive for the unit to favor BT over other providers.
It stopped short of forcing a full split, however, last month when it
agreed that a legal separation was sufficient.
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The logo for the British Telecom group is seen outside of offices in
the City of London, Britain, January 16 , 2017. REUTERS/Toby
Analysts at Bernstein said on Monday that the resolution of Openreach's
structural future felt like ancient history.
"We expect investors to react with disbelief and dismay at this arguably
avoidable controversy at BT," they said.
"The fall out is staggering. By its own admission, BT is expected to compensate
its competitors to the tune of 300 million pounds, although this is a
BT's Chief Executive Gavin Patterson, who recently vowed to improve the service
BT delivered to customers, said Openreach had fallen well short of the standard
it had set itself.
"We take this issue very seriously and we have put in place measures, controls
and people to prevent it happening again," he said.
Shares in BT, which lost a fifth of their value in January when the company
revealed the extent of an Italian accounting scandal and a slowdown in some
government work, were trading down 1.2 percent at 322 pence on Monday.
(Reporting by Paul Sandle; editing by Kate Holton/Ruth Pitchford)
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