Record Broadband Compensation Pay-Outs

Ofcom's annual report shows that a record-breaking £20.7m in compensation was paid to broadband customers under the new automatic compensation scheme in the last six months of 2019.

The Automatic Compensation Scheme

Back in November 2017, Ofcom announced that broadband and landline customers would, under a planned new scheme (in two years) automatically be able to get compensation from their providers when things go wrong without the need for a claim.  At the time, an £8-per-day compensation voluntary agreement was reached between Openreach and five of the UK's internet service providers - BT, Sky, TalkTalk, Virgin Media, and Zen Internet.  Others such as PlusNet joined later.  The agreement was prompted by a review and intervention in the broadband market by regulator Ofcom, which introduced a voluntary Code of Practice.

The compensation scheme formally started in April 2019 against a backdrop of 7.2 million cases of broadband or landline customers suffering delayed repairs, installations or missed appointments per year and before the announcement of the scheme only 1 in 7 customers received compensation, which was partly due to having to go through a claim process.

Jumped From £8m to £20.7m

The Ofcom report shows that in last 6 months of 2019, £20.7m in compensation was paid to disgruntled broadband customers compared to the £8m that was paid to customers in the first six months of 2019 before the automatic compensation scheme was introduced.

The £20.7 in compensation pay-outs are reported to include £9.7m for delayed repairs following loss of service, 1.6m for missed appointments and £9.5m for the delayed provision of new services.

Satisfaction Despite Complaints

Curiously, even though there have been record-breaking compensation pay-outs, the Ofcom report shows that 85 per cent of customers were actually satisfied with their broadband service and 90 per cent of mobile customers reported being happy with their phone service.

PlusNet Top – TalkTalk Bottom

The Ofcom report shows PlusNet customers as being the most satisfied with their broadband and TalkTalk users the least satisfied with their broadband services.

What Does This Mean For Your Business?

For businesses, a fast and reliable broadband connection is vital to operate and compete effectively in today’s marketplace. Problems with broadband services can be very costly and frustrating for businesses, and many businesses felt that they shouldn’t have to fight for compensation on top of the problems caused by poor broadband services and that old levels of compensation were too low, and didn’t come close to reflecting the harm caused. Automatic compensation is, therefore, helpful, and the numbers appear to show that many more businesses are at least getting something under the new scheme, helped by the fact that the barrier of a claims process has been removed.  Many businesses may still think, however, that the amounts on offer are unlikely to cover the disruption and problems caused after several days of broadband problems.

The automatic compensation scheme is good news for small businesses because one-third of small and medium-sized enterprises (SMEs) choose residential landline and broadband services, and around half (49%) of SMEs don’t know if they’re entitled to compensation when service falls short (Ofcom figures).

It is also reassuring to know that the main providers are on board with the scheme and that Ofcom plans to keep monitoring its implementation, review it after one year, and step in if it's not working well enough for customers. The monitoring, however, may lead service providers to feel that they are paying too much under the new scheme and the danger is that this could be reflected in higher broadband charges.