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BT shares fall

Money back plan for poor broadband service

BT shares were down almost 2% after the telecoms regulator said customers should be compensated for slow repairs and missed deadlines.

Ofcom wants providers to pay automatic compensation – either a cash payment, or a credit on a bill – to customers who suffer from poor landline and broadband services.

Customers would be entitled to automatic compensation, without having to go through a potentially lengthy and difficult claims process, whenever:

• their landline or broadband is not fixed quickly enough after it has stopped working; or

• their new landline or broadband service is not up and running on the day promised; or

• an engineer doesn’t arrive for an appointment as scheduled.

Ofcom estimates that the plans would mean up to 2.6 million additional landline and broadband customers could receive up to £185m in new compensation payments each year.

Lindsey Fussell, Ofcom’s consumer group director, said: “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.

“So we’re proposing new rules to force providers to pay money back to customers automatically, whenever repairs or installations don’t happen on time, or when people wait in for an engineer who doesn’t turn up. This would mean customers are properly compensated, while providers will want to work harder to improve their service.”

Compensation payments would be set by Ofcom, and designed to reflect the degree of harm suffered by consumers. Here is how Ofcom’s automatic compensation scheme would work:

The proposals apply to fixed broadband and landline telephone services only. Ofcom analysis shows that mobile companies already make significant compensation payments to customers and it estimates that less than 1% of mobile customers lose service for more than 24 hours.

Its  analysis suggests that each year:

• there are 5.7 million cases of consumers experiencing a loss of their landline or broadband service;

• engineers failed to turn up for around 250,000 appointments; and

• around one in eight landline and broadband installations were delayed (12%), affecting more than 1.3 million people.

Measures for small businesses

Around one-third of SMEs choose residential landline and broadband services and would also benefit from the compensation proposals.

But Ofcom proposes that all SMEs should benefit from clearer, more detailed information upfront about the service on offer – including whether they are entitled to compensation, and how much, when problems occur.

SMEs can negotiate bespoke terms and there are standard landline and broadband business contracts that provide service guarantees and compensation for a number of different problems, including loss of service. But Ofcom’s research found that around half of SMEs (49%) were uncertain of their rights when providers fell short.

Ofcom says its proposals for greater transparency should help SMEs to compare the service quality and compensation arrangements for different contracts, and choose the one that best meets the needs of their business.

Next steps

A consultation is open until 5 June 2017 and a decision will be made towards the end of the year.

In response to Ofcom’s plans, BT, Sky and Virgin Media have jointly put forward a draft proposal to introduce automatic compensation through a draft voluntary industry code of practice. At this stage, Ofcom said it does not consider that this proposal sufficiently meets its concerns.

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