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Openreach and UK ISPs Still Far Apart on Automatic Compensation

Wednesday, July 4th, 2018 (8:59 am) - Score 3,827

The Office of the Telecoms Adjudicator (OTA) has said that ISPs and Openreachremain some distance apart” from an agreement on payments as part of Ofcom’s forthcoming automatic compensation system, which will force providers to compensate consumers for a total loss of broadband connectivity.

The voluntary system, which is expected to be adopted by all of the UK markets largest broadband ISPs (full details), requires providers to compensate consumers by £8 per day for delayed repairs following a loss of broadband service (assuming it isn’t fixed within 2 working days). On top of that missed appointments would also attract compensation of £25 and a delay to the start of a new service would be £5 per day.

However ISPs were quick to point out last year that Ofcom’s system largely overlooked responsibility from the supplier side, which is a particular problem when considering Openreach’s national infrastructure. Many of the broadband faults experienced by related ISPs will physically occur on Openreach’s side of the network.

Strictly speaking this is a contractual matter between ISPs and their suppliers, although Ofcom did agree that “any changes to Openreach’s commitments which may be necessary to reflect the requirements of an automatic compensation scheme should be the subject of industry negotiations.

Since then the OTA has been busy facilitating related discussions over revised Service Level Guarantees (SLG) with Openreach, regarding their additional end-customer compensation obligations, but the two sides still appear to be quite far apart.

OTA Statement

To date, there have been two Openreach offers; both broadly aligned to the overall quantum of cost referenced within the Ofcom [Wholesale Local Access] Statement. CPs have responded to both seeking higher SLG payments that align with the proposed [Voluntary Code of Practice] payments. Both sides, therefore, remain some distance apart.

The technical enhancements for supporting KCI messages, required to assist compliance, are largely agreed and the development remains on track.

Nobody ever expected such negotiations to be easy and the regulator has previously hinted that they would be willing to step-in if no agreement could be reached, but we’re not yet at that stage. Ofcom is well aware that implementing such a system would be complicated and as such they don’t intend to begin enforcing it until early 2019.

A Spokesperson for Openreach told ISPreview.co.uk:

“Automatic compensation is the right thing to do for customers, and that’s why we’ve been proactively compensating our wholesale customers for every appointment we miss, and any delays to repairs and provisions, since 2008.

We have also fully supported Ofcom’s voluntary Code of Practice since its inception, and have committed to invest heavily in systems and automatic compensation payments as a result of the new code.

We’re still in discussions and working closely with Ofcom and our Communications Provider customers to consider the best way to implement it.”

We should add that most faults tend to be resolved within 2 days, although the regulator has estimated that up to 2.6 million UK customers could still receive up to £142 million per year in automated compensation payments. Ofcom believes that the changes will offer “incentives for providers to improve service quality“, although it seems equally likely to result in all of us paying higher prices for our broadband connections.

Some consumers may also face confusion as not all connectivity problems stem from your broadband ISP (e.g. incorrect home network configurations, weak WiFi signals, faulty devices etc.).

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24 Responses
  1. Avatar Optimist says:

    “Strictly speaking this is a contractual matter between ISPs and their suppliers” is exactly correct, so ISPs cannot use the failings of a supplier as an excuse for being let off their obligations to their customers.

    So either ISPs will have to put their prices up to pay for the shortcomings of Openreach, or make alternative arrangements for the “last mile”, either by switching to wireless, or installing their own fibre.

    1. Avatar Craig says:

      Automatic Compensation has been implemented wrong if this wasn’t thought about. If the issue is with the wholesale network, they should pay out and this be passed to the end customer via the retail provider. After all this wasn’t designed to be a wind rush to the consumer. It was designed to make providers think about taking too long to fix faults. If Openreach are not feeling the pain of paying compensation, they won’t see a need to improve their service and the point of compensation falls apart.

      People want their broadband to be reliable, not compensation at the end of the day!

    2. Mark Jackson Mark Jackson says:

      As above, Openreach and ISPs are negotiating those contracts to reflect Ofcom’s changes, so whatever happens there will almost certainly be a compromise.

  2. Avatar Joe says:

    perverse incentives to deal with ppl @ 1 day 23hrs over people >2days

  3. Avatar dragoneast says:

    Yet more regressive taxation. No wonder the rich are overjoyed.

    1. Avatar dragoneast says:

      Why not those who want automatic compensation pay a small extra subscription for it, so it’s self-financing? That’s how capitalism is supposed to work. Otherwise all that happens is that the serial moaners just exploit the system to everyone’s detriment. Nice excuse to put up charges for everyone.

    2. Avatar AnotherTim says:

      Are you arguing that if you have a contract with me to supply you with something and I don’t supply you with it I can keep your money anyway? What can I interest you in?

    3. Avatar somone says:

      i wish i could give you a thumbs up on here “AnotherTim” lmao

  4. Avatar un4h731x0rp3r0m says:

    “On top of that missed appointments would also attract compensation of £25 and a delay to the start of a new service would be £5 per day.”

    This is the bit i would have an issue with if i were an ISP. Why should an ISP first have to reimburse the customer through no fault of their own when Openreach engineers do not turn up? It is utter madness that one organisation should have to pay for another’s incompetence. I hope ISPs especially small ones have the sense to block any activation/connection payments to Openreach when they do not turn up in future and not try to seek/recoup costs after the fact when BT have had the money in the bank for several days/weeks/months making further profit on the interest.

    The only organisations this part of the rule is going to truly punish are those that sell the product and install the product (such as many altnets or VM).

    Thank god (for now) its just another of Ofcoms silly “voluntary” schemes. I highly doubt any ISPs beyond the big players have any desire in signing up to losing money, complications, added costs and hassle due to Openreach idiocy.

    1. Avatar Optimist says:

      “Why should an ISP first have to reimburse the customer through no fault of their own when Openreach engineers do not turn up?”

      Because the customer has a contract with the ISP, not Openreach. If the ISP’s supplier (Openreach) does not do what it is contracted to do, then the ISP should seek compensation and / or make alternative arrangements to serve their customers.

    2. Avatar un4h731x0rp3r0m says:

      “Because the customer has a contract with the ISP, not Openreach. If the ISP’s supplier (Openreach) does not do what it is contracted to do, then the ISP should seek compensation and / or make alternative arrangements to serve their customers.”

      Ah i see so the organisation that has done its best to connect a customer, followed all the rules, done all the ordering right and wants to provide a service to people has to go chasing rat barstewards who did not bother to turn up…….. Justice at its finest, or you may think so.

    3. Avatar Optimist says:

      “Justice at its finest, or you may think so”

      It’s contract law. The same principle applies when you find a product you have purchased is faulty. It is up to the seller to compensate you, not the wholesaler, manufacturer, or the supplier of any part.

    4. Avatar Clifford says:

      Sale of goods act and sale of services are different laws you best go read up on that and then re-quote here.

    5. Avatar AnotherTim says:

      Surely the “Supply of Goods and Services Act 1982” covers both goods and services? Now, you could argue that broadband provision includes both goods (router) and services (working internet connection), but as the ISP is not (at least in any case I’m aware of) acting as an agent, they are responsible for ensuring both are fit for purpose (regardless of the underlying cause for any deficit).

    6. Avatar Clifford says:

      No such thing its called “Supply of Goods and Services Act 1982” when it includes services, and the differences are…

      Sales of Goods Act – specifies that goods provided for sale must be as described, of satisfactory quality and fit for the purpose so this covers the PRODUCT only.

      Supply of Goods and Services Act – details that if a consumer enters into a contract for the supply of goods or services they must be supplied with reasonable care and skill within a reasonable time and at a reasonable charge. This covers the PRODUCT and the SERVICE supplied under contract.

      If the service is not supplied then the consumer has a right to claim under the “Consumer Rights Act 2015”. This entire Ofcom thing and the false we are doing it for the customers is utter nonsense.

    7. Avatar AnotherTim says:

      Well I’d be quite happy sorting out my own compensation for a shoddy service – I’ve done it several times and reached satisfactory conclusion every time. And for failed broadband I’ve received far more compensation than Ofcom are suggesting. However, not everyone is comfortable with legal matters. Thats why the Consumer Rights Act 2105 was introduced, and now why Ofcom want to make compensation automatic. Personally I can’t complain about their motivation.

    8. Avatar un4h731x0rp3r0m says:

      Except Ofcoms scheme is optional so they do not really care.

  5. Avatar Meadmodj says:

    Any sub-contracted service can have service failure. The Contract in this case is between the ISP and their customer. Why should the customer wait for a refund?. The relationship between ISP and CP can either be at a detailed level (costly) or a swing/roundabouts with a contract true up periodically. The main cost here if dealt at a detail level is determining who is at fault ISP, OR or Customer.

    1. Avatar un4h731x0rp3r0m says:

      “Any sub-contracted service can have service failure. The Contract in this case is between the ISP and their customer. Why should the customer wait for a refund?. ”

      Is that not what the ISP of Openreach is, a customer, which will have to wait for its refund?

    2. Avatar Meadmodj says:

      If the Customer does not get service on the date specified or an appointment is missed then Ofcom is saying the Customer should be compensated automatically. However an issue may not be down to Openreach (bad customer details or data in ISP systems etc}. Openreach already compensate ISPs where OR processes fail. The discussions I understand are to realign the reporting to meet the Ofcom requirement on the ISP and hopefully agree a common approach. If every incident is arbitrated then that builds cost in therefore a more mature approach is required which invariably will not be the timescales Ofcom is requiring.

    3. Avatar Clifford says:

      “Ofcom is saying the Customer should be compensated automatically.”

      Surely then the customer is also an ISP in this case, as they pay Openreach do they not?

      “Openreach already compensate ISPs where OR processes fail.”

      What is the time frame in which Openreach compensate ISPs for something which is the fault of Openreach?

    4. Avatar un4h731x0rp3r0m says:

      “What is the time frame in which Openreach compensate ISPs for something which is the fault of Openreach?”

      Indeed is the ISP left out of pocket with this new scheme first and then has to wait on Openreach to refund them?

      How long will an ISPs customer have to wait for its refunds? And how long does an ISP have to wait its refunds from Openreach? I suspect their is quite a disparity there.

  6. Avatar Curious says:

    What ideally I’d like to see implemented is exactly what is the responsibility of the ISP to refund a customer, and when that customer can expect a refund.
    On the wholesale/supplier side, there’ll also need to be framework detailing what is and isn’t each other’s responsibility.

    At the minute, it’s all murky water. ISP’s have to mostly fight for compensation from Openreach for things such as missed appointments and SFI charges incorrectly applied.

    There has to be some clarity between how long a consumer should wait for a refund, and how long an ISP must wait for a refund. And whether the customer gets the automatic refund before the ISP, or only once the ISP has received the automatic refund themselves?

    You can’t just blanket refund people, because you’ll then find people clever enough to make it difficult to resolve immediately, and then are compensated for days without service when the delays were of their own making (not being around for router delivery – connecting equipment the wrong way so as to not allow the connection to work.)

    Do they get refunds only if there is Openreach intervention?
    Do they get refunds if they have been offline for a certain period of time, regardless of the issue?
    How will it be determined who is at fault?

    There are so many holes in this, that it needs years of careful planning to ensure it is fair for everyone, and not just the consumer.

    1. Avatar Clifford says:

      “At the minute, it’s all murky water. ISP’s have to mostly fight for compensation from Openreach for things such as missed appointments and SFI charges incorrectly applied.”

      Exactly there has even been news items about that on here before.

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