ISPs facing compensation payouts
Delays and missed appointments to incur charges as ISPs face criticism over billing and performance.
INTERNET SERVICE PROVIDERS are to face £185m in additional, automatic compensation payouts if they don’t improve repair and installation times.
The threat comes from telecoms regulator Ofcom after a flurry of high-profile billing, data breach and infrastructure irregularities involving broadband and network providers.
Under the new compensation proposals, first aired more than a decade ago, ISPs would be obliged to make automatic compensation payments for customers left without broadband or fixed line services for more than two days.
Delays in connecting services would also incur charges, as would cancelled or postponed engineer visits – with Ofcom predicting ISPs could be forced to hand over almost £200m in unclaimed compensation.
“When your landline or broadband goes wrong, that is frustrating enough without having to fight tooth and nail to get fair compensation from the provider,” said Lindsey Fussell, Ofcom’s consumer group director. “This would mean customers are properly compensated, while providers will want to work harder to improve their service.”
There are 5.7 million cases of consumers experiencing a loss of landline or broadband service every year, according to Ofcom. Engineers fail to turn up for around 250,000 appointments each year and one in eight landline and broadband installations are delayed, affecting more than 1.3 million customers.
Under the proposals, customers whose phone or broadband service was down for two working days would receive £10 per day thereafter. Engineer appointments cancelled within 24 hours or not attended would incur a £30 charge, while delays in connecting services would cost ISPs £6 a day.
Industry watchers have questioned whether Ofcom’s proposals adequately compensate consumers for missed appointments. “From a customer’s perspective, I don’t think £30 is much compensation for staying at home for a day instead of going to work,” said Dan Howdle, consumer telecoms analyst at cable.co.uk, a broadband comparison site.
He added: “Most people would rather just have the problem fixed. It’s not just that they’ve stayed home and no-one turned up – it’s more that the broadband’s still not fixed.”
The changes could force ISPs such as BT to invest in more engineers, but only if the cost of compensation outweighs the cost of hiring staff. “In order to avoid paying compensation, BT will have to invest in more engineers, will need to tighten up systems, turn up to appointments and address problems more quickly in general, which should be good for the consumer,” said Howdle.
“It will be driven by just having two columns in a spreadsheet – it will cost us this much to carry on doing things as they are or this much to invest more in engineering and maintenance in infrastructure. What Ofcom has done has made investment in engineers the cheaper option, whereas up until this point missing appointments and letting problems drag on was cheaper.“
Providers such as BT may simply pass on the extra costs in broadband bills, however. “Excessive costs in any project are likely to be passed through to customers in some way,” explained Matthew Evans, CEO of the Broadband Stakeholder Group, which represents many of the leading service providers. “That’s why there is a fine line between promoting better delivery of quality of service and using automatic compensation schemes as a tool for doing so.”