Ofcom UK Introduces New Business Broadband Speed Code of Practice

The national UK telecoms regulator, Ofcom, has today introduced a new Voluntary Code of Practice that has been specifically designed to help give UK businesses more accurate and reliable information on the broadband speeds they should receive from ISPs.

The Voluntary Business Broadband Speeds Code of Practice, which is currently supported by seven ISPs (these are said to provide services to around two thirds of SMEs who have “standard broadband“), is similar to the code that domestic consumers can already benefit from (here).

Current UK ISP Signatories to the Code:
* BT Business
* Daisy Communications
* KCOM (Hull Businesses)
* TalkTalk Business
* Virgin Media
* XLN Telecom
* Zen Internet

The new code requires ISPs to not only provide more accurate estimates of connection performance (both DOWNLOAD and UPLOAD speeds), but to also help resolve related problems when they arise. Business customers will also be allowed to exit their contract at any point if speeds “fall below a minimum guaranteed level“.

An example is provided for a small business that buys a package advertised as being ‘up to’ 17Mbps (Megabits per second) capable, which is then given an personalised estimated download speed of 11.3Mbps to 15.6Mbps and also a Minimum Guaranteed Speed (MGS) for their specific line of 7Mbps.

Under the above approach if the MGS speed falls below 7Mbps and the ISP cannot fix it then the business can exit their contract without penalty, which could be painful for the ISP because business services often employ longer contract terms (e.g. 24 months).

The new code has been in development since last year (here) and stems from Ofcom’s earlier research, which found that businesses (especially smaller SMEs) were confused about the difference between ‘actual‘ and ‘advertised‘ broadband speeds. At the time some business ISPs were also failing to provide a personalised speed estimate during the order process.

Sharon White, Ofcom Chief Executive, said:

“Ensuring consumers get the best possible communications services is Ofcom’s top priority. And that includes businesses getting the broadband speeds they need. Yet too many buy unsuitable broadband packages because of confusing or insufficient sales information, or are hampered by slow speeds after they’ve signed on the dotted line.

Where broadband companies fail to provide the speeds they promise, we’ve made it easier for businesses to walk away from their contracts without penalty. Providers have also agreed to give clear and reliable speeds information upfront so business customers can make more informed decisions.”

Mike Cherry, Policy Director for the Federation of Small Businesses, said:

“A dependable broadband connection is now essential for almost every aspect of modern business life. Everything from driving online sales, customer relations and accessing data held in the cloud relies on a stable broadband connection. Yet small business dissatisfaction with broadband providers appears to be widespread and deeply felt.

The new Code of Practice announced by Ofcom is a timely and well targeted intervention in the business broadband market. To plan effectively, firms need accurate information on what speeds they can expect, and how much this will vary. Business owners should be able easily to compare suppliers and exit a contract early if their communications provider does not deliver the speeds promised.”

Ofcom says that the new code applies to all businesses (regardless of size) and to all “standard business broadband” services across “all technologies” (e.g. ADSL, Cable (DOCSIS), FTTC, FTTP, Wireless and Satellite). But there are some caveats to this, as we’ll explain below.

Internet providers must also inform business customers about how they manage traffic on their network and “provide further detailed speeds information in writing to the customer after the sale.” Ofcom will also be using ‘Mystery Shopping’ tests in order to ensure that ISPs are doing as they’ve promised.

Unfortunately there are some caveats with the code. Despite Ofcom’s earlier claim that it supports “all technologies“, the code does not apply to technologies or services where speeds are guaranteed and/or the customer has a dedicated connection (e.g. Ethernet in the First Mile (EFM), Ethernet over FTTC (EoFTTC) and Leased Lines).

Similarly the ‘Right to Exit‘ clause is technology specific and thus DOES NOT APPLY to FTTP and Cable (DOCSIS) connections “because by the very nature of the technology used, speed performance is less variable“. Ofcom’s remark may be correct, although this neglects the fact that network congestion and other capacity related issues can still impact their performance.

The code itself will not come into effect until 30th September 2016, which is a date that has been chosen so that ISPs have ample time to adapt and also so that Ofcom can hopefully attract more ISPs to give their support. Indeed there are masses of business ISPs in the market and the worry is that many could simply choose to ignore this code.

UPDATE 11:19am

The first responses from ISPs are starting to surface, albeit so far only from those that have already signed-up to the code.

Peter Kelly, Managing Director of VirginMedia Business, said:

“We welcome Ofcom’s initiative to provide better protection to small businesses by introducing a code of practice that ensures they receive the service expected. Virgin Media Business is proud to be a signatory of the code and we’re committed to helping SMEs achieve their full digital potential by offering the UK’s fastest, widely available business broadband speeds.”