BT, which owns the cable, said around 7,800 customers in Williton, Washford, Bishops Lydeard and Porlock experienced total "community isolation" but admitted that other parts of West Somerset, including Minehead and Watchet, were partially affected.
Phone lines, emails and access to the internet, along with some mobile phone coverage, was hit, while cash machines were unable to dispense money and shops and businesses could not handle credit card transactions.
BT spokesman Jason Mann would not say how the cable was damaged but would only confirm that it was accidental and that it happened somewhere outside Taunton.
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But the thousands of people affected were still 'incommunicado' for more than six hours across the working day.
Mr Mann said the cable was damaged at about 11.30am, with services restored just before 5.45pm.
"This was a major cable and we did everything we could to restore services to our customers," he said.

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