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Ofcom Mulls Automatic Compensation For Broadband Problems

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Regulator rejects industry proposals, and proposes instant compensation for when landline and broadband services goes wrong

The British communications regulator wants landline and broadband service providers to provide automatic compensation for British customers when problems occur.

Ofcom says that the automatic compensation would apply to 7.2 million customers who experience service failings each year. The proposals would mean that service providers would have to hand over million of pounds more annually to British consumers.© Artem Furman - Fotolia.com

Compensation Proposals

Ofcom would require providers to pay automatic compensation (without the customer asking) for poor service, in the form of either a cash payment or a credit on a bill.

This poor service would be for customers who suffer slow repairs to their broadband or landline; or missed deadlines for when the service is supposed to be repaired; or even missed engineer appointments.

The regulator believes this would provide a step-change in telecoms service quality, and would mean that up to £185m in extra compensation would be paid out each year to 2.6 million additional landline and broadband customers.

At the moment there are 7.2 million instances where landline or broadband customers suffer delayed repairs, missed appointments or delays to new installations. But it seems that service providers are only paying £16.3m in compensation in just 1.1 million of these cases.

Ofcom’s idea of the customer being entitled to automatic compensation, would mean they don’t have to go through a potentially lengthy and difficult claims process.

“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,” explained Lindsey Fussell, Ofcom’s Consumer Group Director.

“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,” said Fussell. “This would mean customers are properly compensated, while providers will want to work harder to improve their service.”

Ofcom would set the compensation payments and said that it would reflect the degree of harm suffered by consumers.

Ofcom says that the proposals would only apply to fixed broadband and landline telephone services, as its analysis shows that mobile companies already make significant compensation payments to customers.

The Problems

Ofcom believes the proposals are necessary because whilst most consumers are generally satisfied with their telecoms services, a significant minority still experience problems.

Indeed, Ofcom stats have found that every year there are 5.7 million cases of consumers experiencing a loss of their landline or broadband service each year.

It also found that engineers failed to turn up for around 250,000 appointments.

And Ofcom found that around one in eight landline and broadband installations were delayed (12 percent), affecting more than 1.3 million people.

“When they occur, these problems can leave customers unable to keep in touch with friends and family, or use the internet, while one in four people (26 percent) who experienced a missed appointment have taken a wasted day off work to wait at home for an engineer,” said Ofcom.

Ofcom pointed out that at the moment compensation payments are currently given ad-hoc to only a minority of those suffering problems (in up to 15 percent of cases), and can fail to adequately reflect the harm caused.

And Ofcom wants to include small businesses in these proposals, as around one-third of small and medium-sized enterprises choose residential landline and broadband services.

But it believes that SMEs should have clearer, more detailed information upfront about the service on offer, including compensation entitlements.

Industry Proposals – Not Good Enough

The Ofcom proposals are open for consultation until 5 June, after which it will publish its decision statement towards the end of the year.

Ofcom also said that BT, Sky and Virgin Media have jointly put forward a draft proposal to introduce automatic compensation through a draft voluntary industry code of practice.

However Ofcom does not consider their proposal sufficiently meets its concerns, when quality of service falls short.

The Ofcom proposals comes in the same week that Plusnet was fined £880,000 for continuing to bill customers for broadband and landline services after they had cancelled their contracts

Vodafone and EE have also felt Ofcom’s wrath in recent months, with both fined millions of pounds for overcharging.

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