Businesses Call on Ofcom to Extend Auto Compensation for UK Broadband Outages

The British Chambers of Commerce (BCC), the Federation of Small Businesses (FSB) and Institute of Directors (IoD) have this week written to the UK telecoms regulator, Ofcom, in the hope of encouraging them to extend the automatic compensation scheme for consumer broadband outages to businesses. Easier said than done.

The current voluntary system (full summary), which was first introduced in 2019, typically requires member ISPs to compensate consumers (cash or bill credits) by £9.76 per day for delayed repairs following a loss of broadband (assuming it isn’t fixed within 2 working days and is the fault of the ISP’s own connected network and not within your home). Missed appointments also attract compensation of £30.49 and a delay to the start of a new service would be £6.10 per day.

Ofcom’s existing compensation scheme does in fact cover some business ISP networks and connections too, albeit specifically only those that sell domestic grade fixed line broadband services. But the BCC, FSB and IoD are calling on the regulator to extend this and to do more to improve network resilience, so that they face fewer costly disruptions and that would, they say, “deliver significant productivity benefits to the UK economy”.

“Supporting businesses to increase productivity and economic growth is critical, and solutions which drive improvements in UK connectivity infrastructure will play an important role in achieving this,” said the joint letter to Ofcom, which has been seen by the FT (paywall).

However, extending the automatic compensation system into areas like Ethernet connectivity and Leased Lines, would be tricky. Firstly, these should already be covered by Service Level Agreements (SLAs) where compensation plays a role. On the other hand, SLAs do vary, but this is still an area where we’d generally expect larger businesses to have greater competency in their contract arrangements and network setup than consumers.

In addition, a competent business would know to ensure that they have access to good redundancy for when their main link fails, although some still fail at the basics. Suffice to say that extending the regulator’s own scheme, which we must not forget is still a voluntary one, would be a much more complex and costly field for the regulator to set standardised pricing around.

The latest push also appears to echo a survey from London ISP Vorboss earlier this year (here). This found that 51% of businesses with a fixed business internet contract reported that they experienced at least one loss of service in the past year (crucially, it’s unclear if this was due to a local network issue or the ISP’s side), while 61% of businesses that experienced an outage did not receive any compensation.

James Fredrickson, Vorboss’ Chief Corporate Affairs Officer, said:

“It’s clear from the responses of the biggest business internet providers that compensation is anything but automatic. Hiding behind compensating on a ‘case-by-case’ basis is exactly what Ofcom needs to put a stop to.

Our research shows that 61% of businesses that experienced an outage in the last year did not receive any compensation, with 44% saying requesting compensation wasn’t worth the time and effort.

For those that do pursue compensation, the typical payout is hardly worth the effort. Standard business internet tariffs today would offer only £7.53 per hour of outage in compensation – about the price of a pint of craft beer in a London pub – for outages costing a typical London business more than £18,000 in productivity a year.

By forcing internet providers to automatically compensate, Ofcom would incentivise networks to minimise outages and compete on resilience of connectivity. Our research shows that even marginal improvements will have dramatic productivity benefits for UK businesses.”

The regulator is currently in the process of updating their network resilience guidance to provide greater clarity on how UK broadband ISPs, mobile operators and other digital network companies can “reduce the risk of network outages“ (here).

Ofcom are expected to issue a statement on this soon, but at present their proposals do not include a plan for extending automatic compensation to premium business connections and doing so would certainly require a separate consultation, while potentially also raising the price of related connectivity services.

Ofcom’s Proposals

We propose to introduce an updated version of our resilience guidance for CPs, which sets out the measures we expect them to take in relation to the resilience of their networks, as part of their security duties under s105A-D of the Communications Act 2003. Measures contained in the proposed guidance are flexible enough to apply to all types of CPs offering communications networks and services in the UK, while also allowing for continued technology evolution.

This includes:

• Ensuring that networks are designed to avoid or reduce single points of failure.

• Ensuring that key infrastructure points have automatic failover functionality built in, so that when equipment fails network traffic is immediately diverted to another device or site that can maintain end user connectivity.

• Setting out the processes, tools, and training that should be considered to support the requirements on resilience.

UPDATE 7:42am

We’ve managed to get a copy of the full letter.

Open Letter to Ofcom

Dear Dame Melanie,

We are writing to you to express our collective support for an automatic compensation scheme for fixed business connectivity.

Connectivity is a key enabler of economic growth. We know from our members that having access to resilient and reliable connectivity helps all types of businesses to operate successfully. And that loss of connectivity has a significant impact on productivity.

We all want to play a part in helping the UK economy to grow, but connectivity outages are impacting this ambition. Recent research commissioned by Vorboss identified that more than half of UK fixed business connectivity customers experienced one or more outages in the past year. As a result, the UK economy lost approximately £17.6 billion in economic output over the same time period.

This shows that even small improvements in network resilience would result in significant productivity benefits to the UK economy.

Despite these outages, 61% of businesses did not receive any compensation. This is consistent with Ofcom’s own work in which it raised concerns about the quality of service and compensation in the fixed business connectivity market.

To drive improvements in service quality in the residential consumer market, Ofcom introduced automatic compensation. This has been a success. By compelling network operators to automatically compensate customers for outages, the scheme incentivised networks to improve network reliability and reduce outages.

We then ask Ofcom to consider establishing a similar automatic compensation scheme for fixed business connectivity providers. The outcome of improved network resilience and fewer outages will deliver significant productivity benefits to the UK economy. Providers may also choose to go beyond the requirements of the scheme as a point of competitive differentiation. It will also act to provide reassurance to businesses that compensation claims are real and can be relied upon.

Supporting businesses to increase productivity and economic growth is critical, and solutions which drive improvements in UK connectivity infrastructure will play an important role in achieving this.

Your sincerely,

Alex Veitch, Director of Policy, British Chamber of Commerce

Gruffudd Jones, Policy Advisor, Federation of Small Businesses

Alexandra Hall-Chen, Principal Policy Advisor, Institute of Directors