BT has been slapped with a £42m fine and ordered to pay around £300m in compensation after lowering penalty payments to other telecoms providers.
An investigation by regulator Ofcom found that between January 2013 and December 2014 BT "misused terms of its contracts" to lower payments made when it failed to complete its Ethernet services and installations on time.
The record fine comes after BT agreed to spin out Openreach into a separate company earlier this month, after mounting pressure from MPs and telecoms providers.
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.
"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."
In addition to the £42m fine and estimated £300m compensation payments, BT was fined a further £300,000 for failing to provide accurate and complete information under the Communications Act 2003.
The fine was initially set at £60m, but was reduced by 30 per cent due to BT's admission of its liabilities.
Openreach CEO Clive Selley said: "We apologise wholeheartedly for the mistakes Openreach made in the past when processing orders for a number of high-speed business connections.
"This shouldn't have happened and we fully accept Ofcom's findings.
"Since I became CEO of Openreach in February 2016, we have monitored this area very closely, we have made improvements to how we process and deliver such connections, and we will make sure the same mistakes aren't repeated in future.
"This issue is unrepresentative of the vast majority of work conducted by Openreach and we are committed to delivering outstanding service for our customers."
Openreach said it has invested in "significant changes" to training, systems and practices for its Ethernet orders in response to its shortfalls.
Lorrin White, managing director of comms VAR Bamboo, said the fine is not a shock given Openreach's habit of "moving goalposts" when it comes to compensation.
She added however that the fine should give Openreach the impetus to improve the quality of its service and avoid future regulatory action.
"As a provider working in the fixed-line arena for nearly 20 years we are used to the complexities and moving goalposts of Openreach's compensation processes so are not surprised to learn that rules have been breached to avoid successful claims," she said.
"While the fine reflects the significant impact that late installations have on businesses and was deemed a justified figure by Ofcom, I hope it will instigate the shake-up required to avoid such rule flouting in the future.
"Openreach now has the opportunity to start a new chapter with service excellence and network investment at the forefront of its proposition. Learning from what went wrong and modifying behaviours will be a critical step in their journey. I sincerely hope that Openreach does learn from this as additional fines will only hinder its ability to invest in a better service for its customers going forward."
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