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Automatic Compensation Goes Live for UK Broadband ISP Customers

Sunday, March 31st, 2019 (12:01 am) - Score 6,540
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Ofcom’s new system of automatic compensation will tomorrow be introduced, which requires major UK ISPs to compensate consumers (cash or bill credits) for a total loss of broadband connectivity (i.e. if the outage lasts longer than 2 working days), missed appointments or delayed installs.

The new scheme was technically finalised at the end of 2017 (full summary), although the regulator recognised that it was a significant change for the industry and thus allowed for a 15 month implementation period in order for ISPs to adapt.

On top of that Ofcom’s system largely overlooked the responsibility of suppliers, which became a contentious issue when considering Openreach’s national infrastructure (many of the faults experienced by related ISPs occur on the supplier side). Happily this was last year settled through a protracted period of sometimes contentious negotiation (here).

Otherwise the new system, which is voluntary but expected to be adopted by most of the markets main broadband ISPs, will compensate consumers by £8 per day for delayed repairs following a loss of broadband (assuming it isn’t fixed within 2 working days). Missed appointments would also attract compensation of £25 and a delay to the start of a new service would be £5 per day.

Automatic Compensation ISPs
BT
TalkTalk
Virgin Media
Zen Internet
Sky Broadband
EE (new addition)
Hyperoptic (new addition)
Vodafone (new addition)
Plusnet (new addition)

NOTE: Hyperoptic and Vodafone will start paying compensation automatically later this year, while EE expects to be able to start paying automatically next year.

broadband compensation final uk isp charges ofcom

The new rule, which is supported by a small piece of legislation in the 2017 Digital Economy Act, aims to benefit both residential consumers and around a third of small and medium sized businesses (SMEs) who buy domestic grade fixed line broadband services.

However the system will only be applied to service outages that lend themselves to being “objectively defined and measured” and which have not been caused by consumers themselves (e.g. you will not be compensated if you damage your own home wiring or aren’t at home when the engineer arrives), although some of these situations could conceivably be difficult to judge.

Back in 2017 Ofcom estimated that up to 2.6 million customers could receive up to £142 million per year in automated compensation payments, which is bound to have an impact on service cost. As a result the regulator believes that the changes will offer “incentives for providers to improve service quality” (e.g. they’re already requiring Openreach to meet tougher Quality of Service standards, which should help).

Conclusions

Most broadband faults are usually fixed within 2 working days, with many being corrected within the space of a few hours or minutes (very few of those ever require an engineer visit to your property). As a result we’d expect that most people won’t run into this system, at least not very often.

However anything that increases the costs for ISPs is likely to be passed on to consumers as price rises, which may explain why some ISPs have already been pushing several price hikes into a single 12 month period. In addition, it’s feared that providers may be discouraged from taking on customers if they come from areas where the local infrastructure is known to be problematic.

Similarly there are concerns about the ability of ISPs to accurately gauge whether or not an outage is legitimate and subject to compensation. Not to mention the increased support costs from dealing with consumers who may demand compensation for issues that are not within the provider’s realm or which are difficult to identify (sometimes even Openreach can have trouble identifying faults in their own network).

Ofcom will also expect ISPs to pay out compensation for losses of service caused by “force majeure-type events” (e.g. extreme weather, strikes, and third party acts), although Openreach has refused to pay out for such incidents on the supplier side (i.e. the burden will fall solely upon ISPs who have no control over such things).

On the bright side Openreach will pay out to cover delays caused by third-party incidents (e.g. vehicles parked in front of a cabinet or a pole on private land that engineers can’t get access to).

Naturally the vast majority of smaller ISPs have chosen not to join the system as the significant financial burden would be too big for them, although by doing so they may risk looking less attractive to consumers. Similarly many smaller ISPs have also opted out of Ofcom’s latest Broadband Speed Code (here), at least for now.

Sharon White, Ofcom CEO, said:

“We think it’s unacceptable that people should be kept waiting for a new line, or a fault to be fixed.

These new protections mean phone and broadband firms will want to avoid problems occurring in the first place. But if they fall short, customers must be treated fairly and given money back, without having to ask for it.

We welcome the companies’ commitment to this scheme, which acts as a strong incentive to improve service for customers.”

In the end we’ll have to wait and see how the new system progresses this year and will keep our readers updated accordingly. Ofcom similarly said they will “carefully monitor companies’ compliance” with the compensation scheme, and report on how it is working in 2020. If customers are not being treated fairly, the regulator said they “will step in and take action.”

The above system doesn’t extend to mobile network operators because related customers very rarely lose service for more than 24 hours (coverage allowing) and “mobile customers generally receive more compensation than broadband and landline customers.”

UPDATE 1:06pm

Updated the member ISP list as Ofcom’s official press release contained a few extra details.

UPDATE 1st April 2019

Added a comment from Zen Internet and the CBI business group.

Richard Tang, Founder and Chairman at Zen, said:

“The voluntary auto compensation scheme is a great step for consumers in the UK, but hopefully, in time, it will become part of the process for all internet service providers as treating customers fairly should be at the core of any organisation.

At Zen, delivering great customer service is in our DNA and we’ve always believed in compensating our customers if we haven’t been able to meet their expectations. We’re delighted to be one of the founder members of the new scheme formalising this approach for residential customers, but have decided to go one step further by extending the scheme to our small businesses, channel partners and wholesale customers.”

Matthew Fell, CBI UK Chief Policy Director, said:

“Seamless connectivity is vital for businesses as it can help flexible workers, reduce costs and close the productivity gap.

However, a buffering internet connection can stop workers in their tracks. By signing up to automatic compensation when services don’t work, operators are taking a proactive approach to work with the regulators and deliver for their customers

This marks a positive step towards achieving a fair deal for consumers on the connectivity they desperately need.”

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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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11 Responses
  1. Avatar Richard

    7 years ago….
    https://recombu.com/digital/article/up-to-prices-for-up-to-broadband-campaign-launched-by-rural-broadband-activist_m10267-html
    Every single major ISP said this was an unworkable idea. I guess they thought this minor modification was cheaper…

  2. Avatar PN

    Why is Plusnet are expecting to join for the future, should be by NOW. NO wonder PN are downfalls lately with billing issues ongoing, poor customer service.

  3. Avatar alan

    “(e.g. you will not be compensated if you damage your own home wiring or aren’t at home when the engineer arrives), although some of these situations could conceivably be difficult to judge.”

    Oh i can see it now, sitting at home waiting for the Engineer to come install your shiny new broadband, they do not show up. You contact your ISP, who in turn where needed contacts Openreach/Voda/whoever it was who was supposed to be coming and they say they did turn up but you was not home or did not answer…… The merry-go-round then becomes a game of he said, she said and you pulling your hair out and never seeing the £25 from the ill thought out scheme.

  4. Avatar Adam

    Don’t agree with it. I believe you should get refunded for the days of lost service by dividing what you pay (monthly) into days of lost service. Meaning £30 a month for broadband/phone with 5 days of lost service will bag you £5. What i do agree with is the compensation of openreach not turning up when promised. I’ve probably lost £100s, maybe lower £1000s taking days off work for openreach not to show, with no warning either. In all honesty, i think it should be more. Don’t openreach/isps charge you for missed openreach appointments?

  5. Avatar Vampire man

    I think the fine should be more. And it goes up the longer you have to wait. I’m currently waiting for another Virgin Media engineer to fix my problem of no service (TV, Phone and broadband) after a week. the first one that turned up was a kid and wasn’t fibre trained. A fibre optic company and he’s not trained to do the job. Just send the tea boy next time.

  6. Avatar Mr Peter A Ford

    I got rid of the EE router and bought a Draytek Vigor. Problems solved!! EE agreed to pay me £50 towards it

  7. Avatar Terry

    I am really surprised that providers that seemingly seem more directly in control over delays and repairs including KCOM and Virgin Media are not part of this. KCOM specifically said they would be when this was first mooted (http://bit.ly/2VapLiC) but notably absent here. Also not great that some pretty big players are scrambling to now want to join, albeit now after launch. Conversely, check out a confident Zen Internet who put some of the likes of

  8. Avatar Jigsy

    Wow; such a shame nobody will ever see any of it.

  9. Avatar Brian Storey

    This is a win for ISPs rather than the customer. Here is why:-

    Previously the ISP would to do 1 or 2 things if a customer was inconvenienced.

    1) Not do anything and hope the customer just accepted it
    2) Give them a gesture of good will, maybe 1 or a few months free service.

    If the customer decided to cancel either during delivery or once live, the ISP had a cost to pay (in most circumstances) so there was a driver on them to avoid this actual cost by giving away something which doesn’t actually cost.

    Further, some ISPs would throw money at customers to effectively pay them off to prevent a complaint going to Ofcom, thus keeping them off the radar. The Industry knows that OFcom place a lot of faith in their call stat categorisations. No calls – no problem…

    Now…

    1) the payments are actually auto paid by Openreach
    2) the payments are auto paid by BTW

    Both of these presently will be more generous for various reasons leaving an opportunity for ISPs to “pocket” more cash than they will payout.

    the bar of what is being offered to the customer is lower, but can be spun as an auto payment and we’re actually giving you something when we don’t have to (maximise the voluntary aspect) OR customers “know their rights” and just want what they believe they are owed.

    • Avatar Bob

      This isn’t quite accurate. The amount Openreach and BT Wholesale compensate CPs is actually quite a bit lower than the rate at which the CP must compensate the customer. Plus Openreach still has an MBORC get out etc which the CPs do not. CPs will not be pocketing cash.

      One of the unsung benefits of the scheme is that everyone (providing you’re with a participating provider) gets compensation. In the past if you had the “confidence” to ask you would typically get something. But you had to ask and not everyone would. Lots of people would just accept it and go away. No one arguments, no more compensation just for the confident outgoing customers only. Compensation for all is to be welcomed.

      And the rates seem pretty fair. My package costs me about £1 /day so to get £8 /day in compensation seems like a good deal!

  10. Avatar R G Wood

    PN I am currently without any Internet or home phone resulting from Plusnet wrongly removing the service 2 weeks early. I have asked for compensation and they say they are not in the automatic scheme but will consider it later.

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