Ofcom has started the formal consultation period on a set of proposals that will see consumer and SME telephone and broadband customers receive automatic compensation for things like slow fault repairs, missed engineer appointments and service activation taking longer than originally promised.
The telecoms industry has laid out its own proposal in the of a voluntary code of practice but is saying that this proposal does not sufficiently meet their concerns. Thus the consultation and an increased likelihood of something being mandated by the regulator.
The Ofcom proposals as they stand mean:
"When a customer’s landline or broadband goes wrong, that is frustrating enough without having to fight tooth and nail to get fair compensation from the provider.
So we’re proposing new rules to force providers to pay money back to customers automatically, whenever repairs or installations don’t happen on time, or when people wait in for an engineer who doesn’t turn up. This would mean customers are properly compensated, while providers will want to work harder to improve their service.Lindsey Fussell, Ofcom’s Consumer Group Director
Crucially the compensation would be paid automatically as a cash payment or a credit on your bill, meaning that while there will be frustration over the fault or missed appointment still you will not have to keep chasing the provider for compensation.
This removal of the ad-hoc arrangements that are currently in place and a clear set of rules across all providers will make it easier for the public understand what their rights are.
The exact amount of compensation that will be paid out has been estimated based on past performance of operators across the UK broadband industry by Ofcom at £185m per year, but we would expect that if compensation was made automatic that the industry would do more to ensure that faults and provisions levels were reduced further.
The finger of blame and chinese whispers can sometimes play a part in how broadband faults (and to a lesser extent telephone faults) are dealt with currently, particularly with the multiple tiers of retail and wholesale arms involved. Some operators have also quietly in the last year or two downgraded their service level options with Openreach, and once you add the time lag from the consumer reporting a fault and Openreach attending to fix it if a local loop fault this would make the fully fixed in two working days limit very tight. An additional point of contention in the new rules is the 'fully fixed', since after some faults the broadband speed takes a period of time to recover depending on how operators Dynamic Line Management systems work, so hopefully once the consultation is all over and anything concrete is published there will be a clear consumer definition of what 'fully fixed' in terms of broadband means. One can envisage a scenario where a provider has an issue with a major node in its network, knocking a large proportion of its customers offline for an hour or two, but by re-routing traffic people can get connectivity, but this may be at the expense of things like latency and throughput. Another scenario is a business or gamer that is reliant on reasonable latency but while their connection is working to some extent, or congestion is so bad that web pages are timing out which many will say is a broken connection but a provider may consider it not to be, hiding behind the contention ratio magic and stating its not them but what other users are doing.
These proposals do apply to all the broadband operators in the UK, and while the larger operators can more easily absorb the charges, Ofcom should work to ensure that the same automatic compensation applies to wholesale providers when dealing with the retailer i.e. ensures that wholesale providers who often sit between Openreach and smaller broadband providers are doing their part. Virgin Media of course as a full vertical operation should have an easier time.
The broadband market in the UK has been price sensitive right from the get go, as many early adopters jumped at broadband as it was cheaper and faster than many dial-up plans some seventeen years ago, and then there was the excitement as Pipex started the price wars with the big bang moment being the TalkTalk phone and broadband bundling in 2006. The Ofcom consultation if you dig deep does explore these areas and looks at how for many (including the SME market) are much more driven by headline price rather than quality of service, low fault rates and how good or bad an operator is in dealing with compensation.
Will automatic compensation drive prices up? Well £185m shared between 23 million connections works out at £8 each or 70p per month, but just like house insurance which we all hate paying but gives us piece of mind, if guaranteed compensation is in place it will be a good thing and for infrastructure operators it will mean more of an incentive to ensure adequate staff levels to deal with faults, though there is bound to an accountant somewhere running the figures to see if there is more profit in keeping the current staffing levels and paying more compensation versus employing more engineering staff.