Out-Law News 2 min. read

Ofcom proposes automatic compensation for telecoms customers


Consumers and some small businesses would automatically receive compensation from telecoms providers for service level failings, under new plans outlined by Ofcom.

The UK's telecoms regulator said broadband and landline customers should be paid compensation for delayed repairs following loss of service, a delay to the promised start date for services, as well as where engineers miss their appointment or those appointments are cancelled with less than 24 hours’ notice.

The proposed new scheme could cost telecoms providers a total of £185 million in additional compensation payments each year, Ofcom has estimated.

"Telecoms services are thought of by consumers as an increasingly essential part of their home and business life," Ofcom said (126-page / 1.73MB PDF). "The disruption and inconvenience caused when they fail can feel on a par with a power cut or loss of water supply."

"Water and energy consumers already receive compensation when services are lost or appointments missed. Given the growing importance of telecoms services and the reliance consumers place on them, it is important that they should be able to obtain redress quickly and easily when they suffer problems with their service," it said.

Under the proposals, all "residential consumers", and around a third of small and medium sized enterprises (SMEs), would receive £10 for each day that repairs following loss of service are delayed, after an initial two working days have passed where the service has not been available.

Those customers would also receive £6 in compensation for each calendar day of delay beyond the promised start date for the provision of broadband or landline services, while they could also expect £30 to be paid in compensation for missed appointments or late cancellations.

Ofcom said a study it carried out found that more than five million people in the UK "lose their landline or broadband service" each year, and that nearly 250,000 engineer appointments are missed. It also said over one million landline and broadband installations are delayed. The problems are sometimes "prolonged, repeated, and last for many weeks or even months", it said.

BT, Sky and Virgin Media proposed a new industry code of practice to introduce automatic compensation for residential landline and broadband service failures. However, Ofcom said the proposal currently does not sufficiently meet its concerns “when quality of service falls short". It said, though, that it would "continue dialogue with industry on their voluntary proposal".

Ofcom's plans are open to consultation until 5 June.

"The scheme proposed in this consultation recognises the growing importance of broadband as a utility," telecoms expert Luke Standen of Pinsent Masons, the law firm behind Out-Law.com, said. "If such a scheme is introduced, it will not only reduce consumer frustration and the lost time for people who take time off work to be available for engineer appointments, but will also improve the productivity of consumers and SMEs who increasingly rely on broadband connectivity to work or run their businesses from home." 

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