Ofcom forces Openreach to lower broadband wholesale prices
The proposed rules will have prices slashed every year until 2020/21
Unified Comms
March 31, 2017
Providers would have to make cash payments or add a credit to a bill for slow repairs, missed deadlines and appointments
Ofcom is proposing plans that would require broadband and landline providers to pay automatic compensation to customers who suffer a poor service.
Customers would be entitled to either a cash payment or credit on a bill, without having to go through a potentially lengthy and difficult claims process.
The compensation payments would be set by Ofcom, which are designed to reflect the degree of harm suffered by consumers. It would work as followed:
The consultation on these proposals is open until June 5, 2017 at 5pm, with the regulator publish its decision statement towards the end of the year.
Rivals’ plan rejected
In response to the plans, BT, Sky and Virgin Media hae jointly put forward a draft proposal to introduce automatic compensation through a draft voluntary industry code of practice.
However, at this stage, it doesn’t consider that this proposal sufficiently meets our concerns, when quality of service falls short.
Ofcom said its analysis already shows that mobile companies make “significant” compensation payments to customers and estimates that less than one per cent of subscribers lose service for more than 24 hours. However, it is an area it will continue to monitor.
The regulator estimates the plans would mean up to £2.6 million additional landline and broadband customers could receive up to £185 million in new compensation payments.
Currently, there are 7.2 million instances where landline or broadband customers suffer delayed repairs, missed appointments or delays to new installations. Financial compensation, totalling around £16.3 million, is currently paid out in 1.1 million of these cases.
Measures for SMEs
Around a third of SMEs choose residential landline and broadband services, with Ofcom claiming they would also benefit from these new proposals.
It is proposing that all SMEs should benefit from clearer, more detailed information upfront about the service on offer, including whether they are entitled to compensation, and how much, when problems occur.
SMEs can negotiate bespoke terms and there are standard landline and broadband business contracts that provide service guarantees for compensation for a number of different problems, including loss of service. However, Ofcom’s research found that just under half were uncertain of their rights when providers fell short.
The regulator claimed its proposals should help them compare the service quality and compensation arrangements for different contracts, and choose the one that best meets the needs of their business.
Improving service
Ofcom consumer group director Lindsey Fussell said: “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.”
Experiencing problems
Ofcom added that while most consumers are generally satisfied with their telecoms services, a significant amount still experience problems.
It analysis suggests that each year:
- there are 5.7 million cases of consumers experiencing a loss of their landline or broadband service;
- engineers failed to turn up for around 250,000 appointments; and
- around one in eight landline and broadband installations were delayed (12 per cent), affecting more than 1.3 million people.
Additionally, just over a quarter of people who have experienced a missed appointment have taken a day off work to wait at home for an engineer.
Compensation payments are currently a given ad-hoc to only a minority of those suffering problems (in up to 15 per cent of cases), and can fail to adequately reflect the harm caused.