ISPs Give Mixed Verdict on Compensation System for Broadband Faults

Internet providers from across the industry have today given a mixed reaction to Ofcom’s newly proposed Automatic Compensation system, which will force fixed line phone and broadband ISPs to pay out cash or bill credits to consumers if they suffer a total loss of service for more than 2 days.

On the one hand many consumers will welcome the change (see full details), which should also push ISPs and network / wholesale suppliers to improve their service quality. On the other hand Ofcom estimated that its system could potentially distribute up to £185m in compensation payments per year and that’s likely to result in a price increase for existing subscribers.

Naturally ISPreview.co.uk has been keen to find out how ISPs felt about the new system and the initial reactions appear to be lukewarm, with most supporting Ofcom’s principle but not the regulator’s execution. In particular some of the biggest players would much rather see an industry-led approach than one driven by the regulator, although Ofcom has already rejected that as being insufficient.

A TalkTalk Spokesperson said:

“We welcome measures to make it easier for consumers to be reimbursed when things go wrong, In principle, we’re broadly supportive of Ofcom’s measures, but it’s important that any scheme is fair and transparent and based on a set of minimum standards that guarantees every line is capable of providing the broadband customers depend on.”

A Virgin Media Spokesperson said:

“It’s important that customers are treated fairly when services can’t be delivered, but this is best achieved through a robust industry-led approach. The industry is working together on ambitious reforms that would incentivise communications providers to compete to provide customers with a better service, while also setting minimum standards that providers would have to meet.”

A Spokesperson for the ISPA UK said:

“Customer service is a priority for ISPA members, borne out by Ofcom’s own research that shows the overwhelming majority of consumers are satisfied with their communications services. ISPA’s own consumer complaint data shows a huge fall in numbers over a ten-year period which demonstrates that ISPs are continually improving their complaint handling.

We understand that on occasion service standards may fall short of what is expected and so ISPA is supportive of a strong and fair consumer protection regime.

ISPA will continue to work with its members to scrutinise the proposals and the potential for unintended consequences, and work with Ofcom to ensure that the UK broadband market remains competitive, transparent and effective.”

Marc Agnew, Vice President of ViaSat Europe, said:

“While financial compensation can’t come soon enough for Britain’s beleaguered broadband customers, Ofcom and the UK government are looking out for haves, and letting the have-nots fend for themselves.

We applaud Ofcom’s plan which should also help improve “truth in advertising”, with service providers being more realistic about the speeds they can deliver to a given street address in order to avoid penalties. However, this initiative won’t improve service for the UK as a whole.

Ofcom is focusing on the people who can already get broadband, and compensating them if the service is unreliable. However, it ignores the millions who can’t get broadband. Ofcom’s proposal is intended to cause incumbents to improve the reliability of the services they offer today, but that’s not going to motivate them to expand their footprint to the underserved and unserved population. On the contrary, it’s going to motivate investment in already well served areas.”

Simon Davies, Boss of iDNET, said:

“This has long been overdue and is very welcome. The biggest problems are caused by Openreach failing to turn-up for an agreed appointment to fix a fault or install a service. This causes great inconvenience to customers who have had to take time off work to be at home and businesses who have booked an installation for the day that they are due to move into their new offices etc. Compensation should be paid at the same rate as the cost of the lost service: either engineer appointment/installation cost and/or daily service rental. It just remains to be seen if Ofcom have the teeth to force Openreach to comply.”

Andrew Sayle, Zen Internet’s Product Manager (Broadband), said:

“At Zen we think Auto Compensation is a good move for consumers.

I think the principle that “a wholesaler should meet the cost of retail level compensation in circumstances where it is at fault” is a very welcome inclusion and necessary in order to make the proposal work. And should also help reduce the likelihood of retail broadband prices increasing.

As a supplier I can foresee us having occasional issues identifying exactly who is to blame and so who is liable to cover the cost of compensation. But when a supplier or wholesaler has let down the customer we accept that the customer should be compensated.

I think the proposed scenarios and levels of compensation are fair and appropriate. I think they will serve as an incentive for communications providers and wholesalers to repair faults as quickly as possible.”

Adrian Kennard, MD of Andrews & Arnold (AAISP), said:

“In principle it is a good idea for consumers.

The biggest issue by far is that OFCOM think we can “negotiate” compensation from carriers like BT Wholesale and Talk Talk. We cannot even negotiate a way for carriers to actually fix faults (both carriers will often insist we buy an optional extra service instead of actually fixing faults). We have no confidence that carriers will pay the same compensation to us, and if that does not happen, apart from being out of pocket, there will be no incentive on the carriers to actually improve services! Indeed, if Openreach pay carriers and carriers don’t pay us, they have incentive for poor service and delays!”

Martin Pitt, Boss of Aquiss, said:

“Our biggest fear with this, is we often get customers who sit on faults for a couple of days, or more, before reporting a problem to us, such as a total loss of phone services. There has to be clear point as to when the clock starts.”

A Spokesperson for Openreach (BT) said:

“We are still in the process of reviewing the detail. However, we would be surprised if we needed to increase what we pay our CP customers given how generous the Openreach SLGs already are.”

We are still awaiting feedback from several other providers and may update again in the future. Sadly BT’s Consumer division chose not to comment.