Procurement · 24 March 2017

Small businesses set for £185m broadband compensation windfall

Broadband compensation
Broadband compensation would be paid if providers fail to switch services on or of engineers miss an appointment

Owners of small UK companies could soon receive automatic broadband compensation if internet access falls short of service obligations, telecoms regulator Ofcom has announced.

Under new proposals, users of residential broadband and landline services will be entitled to automatic broadband compensation if their provider fails to ensure access on the guaranteed date, or if service “down-time” is not addressed quickly enough by an engineer.

According to Ofcom, around a third of small UK companies use residential landline and broadband services and the regulator has proposed the following scale of charges:

  • £10 for each day a service is not repaired (after two working days)
  • £30 for each appointment missed by an engineer
  • £6 for each delayed day the provider fails to start a new service

Broadband compensation would be received via a cash payment or via credit on bills. Ofcom stated that £185m could be paid out every year under the system.

Lindsey Fussell, an Ofcom director, said that broadband customers would be “properly compensated” for a loss of connectivity under the new rules.

“When a customer’s landline or broadband goes wrong, that is frustrating enough without having to fight tooth and nail to get fair compensation from the provider,” she said in a statement.

Ofcom research showed that only half of small business owners were aware of their rights when a provider failed to deliver. Greater transparency in the market could also allow owners to choose the most suitable broadband deal for their company’s needs.

Commenting on Ofcom’s announcement, Dan Howdle, a telecoms advisor at Cable.co.uk, said broadband compensation would act as a “powerful motivator” for providers to act quickly and ensure service levels remained acceptable for business owners.

“It will ensure that investment in prompt maintenance and customer support becomes a preferable option to letting customers down,” he added.

A public consultation will run until 5 June 2017, and major providers BT, Sky and Virgin Media have responded to broadband compensation proposals with a suggested voluntary code of practice. Ofcom rejected this as insufficient.

Research has shown that sufficient broadband access remains a barrier to business growth for many firms, particularly in rural parts of the country.

Speaking to our sister title Real Business, Jamie Turner, co-founder of PCA Predict, a tech firm based in a rural location near Worcester, revealed the poor service his company had received.

“Slow speeds and painfully long installation times hold us back” he said. “We had to have the local village dug up to bring in fibre which was incredibly expensive for us. The installation took almost six months to complete, and our connection costs almost £500,000 a year – it’s pretty rock solid but few businesses can justify even a tenth of that cost.”

Plans for broadband compensation mark the latest step in supporting the connectivity of Britain’s small business community.

In October 2016, new advert regulations were introduced to keep owners better informed of contract costs, and the split of BT from its Openreach arm was officially agreed this month.

In his recent Budget announcements, chancellor Philip Hammond confirmed £200m would be invested over 2017 into providing full-fibre broadband access for small firms across the UK.

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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