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Openreach and UK ISPs Reach Deal on Automatic Compensation

Tuesday, December 11th, 2018 (8:26 am) - Score 2,688
On the table, the network cable and modem, router

After some disagreement Openreach (BT) and five major retail ISPs appear to have finally reached agreement on payments as part of Ofcom’s new automatic compensation system, which from “early 2019” will require them to compensate consumers for a total loss of fixed broadband and phone connectivity.

The voluntary system, which should be adopted by all of the UK markets largest retail 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 – most faults are). 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.

Furthermore the regulator also told ISPs that they’d have to pay out during highly contentious “force majeure-type events“, such as damage caused by extreme weather or strikes etc. One catch with this costly system is that Ofcom only forced the rule on retail providers and not their network suppliers.

The situation created some frustration among ISPs, not least because many of the broadband faults experienced by related ISPs will physically occur on Openreach’s side of the network (excluding Virgin Media and other providers that have their own infrastructure). Ofcom ruled that such issues should be “subject of industry negotiations” and the Office of the Telecoms Adjudicator (OTA) duly facilitated.

Naturally the ISPs wanted Openreach’s related Service Level Guarantee (SLG) payments to reflect the impact they’d suffer from Ofcom’s new Code, but there was disagreement over this point. Back in the summer of 2018 we highlighted that ISPs (i.e. BT, TalkTalk, Sky Broadband etc.) were still pushing for higher payments (here) and the OTA noted how “both sides … remain some distance apart.”

Fast forward to the end of this year and, despite negotiations exceeding the 6-month period of OTA facilitation, a deal has finally been reached (subject to a 12-month review of Cancelled Provisions).

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 fully supported Ofcom’s voluntary Code of Practice since its inception, and are pleased to have reached an agreement with those Communication Providers intending to offer automatic compensation.

Compensation will be paid when delays caused by Openreach occur, including where third parties prevent us from accessing the network.

Automatic compensation will not be paid when there are measures beyond our reasonable control – caused by events such as flooding. This is a well understood exclusion which operates under our existing Service Level Guarantee (SLG) arrangements.”

Our industry sources indicate that Openreach’s final offer to ISPs has improved quite a bit over the starting point and the cover for third-party delays is also to be welcomed (e.g. vehicles parked in front of a cabinet or a pole on private land that engineers can’t get access to), but providers continue to have some concerns.

Ofcom has separately set tougher Quality of Service (QoS) standards to encourage improvement by Openreach (here). On top of that ISPs had hoped that any gaps in the fund being set aside by the telecoms giant might also be filled by further such improvements (i.e. eventually removing the need to pay compensation altogether), although Openreach is allegedly said to have baulked at that concept (very difficult to deliver).

Meanwhile Openreach’s steadfast position not to pay out during “force majeure-type events” has caused some irritation, particularly while Ofcom continues to insist that retail ISPs will have to cover the cost of that themselves. As one industry source told us, “ultimately ISPs are going to end up paying for Openreach’s failures.”

Ofcom believes that the new system will offer “incentives for providers to improve service quality“, although it’s equally likely to result in all of us needing to pay noticeably higher prices for our fixed line broadband connections. The fact that some ISPs, such as BT, have already squeezed in two price hikes within the past 12 months may be an early indication of this.

The regulator has previously estimated that up to 2.6 million UK customers could receive up to £142 million per year in automated compensation payments under the new system, which is bound to have an impact on service cost.

Given the above it’s little wonder that all of the markets smallest players have chosen not to sign-up, although some of those have already been offering money-back guarantees or general compensation for extended outages as par-for-the-course.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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14 Responses
  1. wireless pacman

    I almost fell about laughing when I read the first sentence of the Openreach quote, as it is such a pile of bovine brown smelly stuff. They have not been “proactively compensating”, they have been “proactively avoiding compensating”.

  2. gerarda

    £25 doesnt seem a lot of compensation for taking a day off work.

    • Joe

      But its also far too much for someone who is there regardless….devise a system that can cost effectively deal with those two scenarios.

    • Pete

      It is probably around your months’ rental, or a good proportion thereof.
      How much do you really expect?

    • gerarda

      I cannot see its too much even for someone who has to hang around waiting for someone not to turn up. As Jack said in the post below the charge and comensation should be symmetrical.

  3. Jack

    If an EU is charged £108 for a missed appointment by Openreach then the EU should also get £108 for an appointment where Openreach fail to to turn up.

  4. David Meadmore

    Compensation has to be balanced otherwise we all pay for it. Hopefully this is sufficient to give Openreach enough incentive to invest in systems and processes that appointments rarely fail (both ways) and expedient solutions are provided when there will be protracted delay (eg car demolishing cabinet). ISPs have the choice whether to go for higher service to avoid faults passing the two days.

    BT are already offering packages with a 4G modem if service is lost. Other ISPs may follow this lead. Certainly those with 4G coverage can simply switch to tethering in most cases.

    BT and VM also provide their WIFI users with a public hotspot on their router. Either this or a little bit of neighbourly assistance would help those during an outage (whilst broadband speeds are low). FTTP will be more reliable but will be as long to fix if physically impaired. Those absolutely dependant need to consider contingency before it occurs.

    • Joe

      Thats fine for appointments. But its just unreasonable for acts of gods

    • David Meadmore

      You’ll find a force majure clause in nearly every contract. Ofgen include severe weather in theirs so I am assuming OR overhead cabling and poles will be considered as included.

    • David Meadmore

      Sorry meant included in their compensation.

    • Joe

      Read up. Ofcom is insisting retail ISP cover Acts of God.

    • Dave Meadmore

      Although Ofcom have included all “Force Majeure Events” the consumer contracts still include “an act beyond the reasonable
      control of the party”. I am no lawyer but I would have thought that they would still have a case in law for more severe circumstances. In practice this scheme is aimed at short term service failure, is voluntary and anything major would probably result in the ISP simply withdrawing their service giving notice.

      If more liability was placed on OR then they would need to increase pricing. So the agreement includes what could be expected to happen. In addition an ISP may utilise a number of suppliers in the provision of their service of which any may cause the loss of the service not just the line therefore the retail ISP is the correct place.

      If there are major failures OR are likely to be more resilient (resource/equipment). The assumption is that similar provisions will be made between these main ISPs and the Altnets who may be vulnerable to flooding (equipment cabinets) if not part of their planning criteria.

  5. Yicky Boo!

    I’m hoping that TalkTalk and Plusnet actually have any integrity, as I was without broadband from the 21st November until the 3rd December, and my phone was cut off from the 26th November, when I was supposed to switch from TalkTalk to Plusnet on the 26th November. Despite repeated requests to speak to a supervisor, no action was taken until I had a mental health emergency on the phone to Plusnet, which led to the police being sent to my home for my own safety. Afterwards, I asked about compensation, and I was told that I would be phoned the following day, but no one bothered.

  6. Web Dude

    temporarily ignoring the voluntary nature (!!!!) of the idea, I was interested to read “requires providers to compensate consumers by £8 per day for delayed repairs following a loss of broadband service” and wonder how that will work with someone like Post Office Broadband, where the service is bought in from TalkTalk, and I suspect (if anything like the week I had without service, no broadband and no phone), then Post Office will refund only rental (30p a day) and TT will trouser the daily compensation money from OR.

    Tell us it won’t be so, Ofcom, oh and don’t allow it to be voluntary !!

    Of course, I won’t touch Post Office (or any other third party using TalkTalk or similar wholesaler) because the end user may not be guaranteed the compensation.

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