Automatic Compensation Ofcom | Summary of Proposals

24th May 2017  by Union Street

On June 5 2017, Ofcom’s consultation on automatic compensation (to be paid to end user customers in the event of loss of landline and/or broadband services) will come to a close. The consultation was initiated on March 24, with Ofcom having originally announced its intention to do so in the Digital Communications Review.

The proposed obligations will, under current plans, eventually form a new General Condition (GC) which will be inserted into Part C of the revised General Conditions due to be published later this year.

The new GC will provide compensation for those customers purchasing “landline and broadband services intended primarily for use by consumers”, although Ofcom anticipates that it will also include some small business users who purchase these products.

Whilst Ofcom has not been specific on exactly which type of service falls into the above definition, leased lines, mobile services, and ISDN services are explicitly excluded. Slow broadband speeds will also not be included as the GC/compensation will apply strictly to loss of service.

“Loss of service”, will be defined as, “where the customer is unable to make outgoing calls or to receive incoming calls; or unable to access the Internet and the loss of service requires repair”.

The new GC also aims to protect small and medium sized enterprises (SMEs) – those with up to 250 employees – by ensuring they have additional transparency in their contract terms with regard to the supplier’s policy on redress in the event of service failures.

 

Automatic Compensation Ofcom – How Much & What For?

There are three areas of service where compensation will be due; missed appointments, provisioning delays and repair delays.

Missed Appointments
Where an appointment is not kept by the supplier, or is re-arranged with less than 24 hours’ notice, a single payment of £30 must be paid within 30 days of the missed appointment.

Provisioning Delays
If the contracted service is not activated by midnight on the Customer Committed Date (CCD), the customer will be entitled to £6 for each calendar day that the service remains inactivated after the CCD. The full amount must be paid within 30 days after the date on which the service is actually activated.

Repair Delays
In the event of a loss of service incident, if service has not been restored by midnight on the second day after “Loss of Service Trigger Day” (either the day the customer first reported the issue or the day the provider became aware of the loss of service, whichever is first) the customer will be paid £10 for each calendar day (after the second day) that the loss of service persists. The payment should be made within 30 days after the service is restored.

There will be no cap on the level of compensation to be paid if a problem persists. Ofcom note that Openreach do operate a cap on service level guarantees (SLG) payments, but this is proposed to be removed as part of the ongoing wholesale local access (WLA) market review.

Payment will generally be made by way of credit on the customer’s bill.

Compensation will not be required if the event giving rise to the obligation to pay was caused by an act or omission of the end customer.

 

Provision of Information about Entitlement to Compensation – CPs Responsibilities

On each occurrence on the list below, the Communication Provider (CP) must inform the customer that they may be entitled to compensation if relevant service commitments are not met, whilst also advising on the arrangements for delivery of payment. They are:

  • a customer accepts an appointment
  • a customer is provided with an activation date
  • a customer reports loss of service

Ofcom has stated that the outlined compensation must be paid even in the event of Force Majeure incidents such as when Openreach declares that an incident is a “matter beyond our control”.

Ofcom suggests that the 12 month implementation period allows the industry to re-negotiate any relevant SLA/SLG agreements ensuring that wholesalers make appropriate payments in these circumstances.

The GC will also give Ofcom the power to request from CPs, information on compensation payments they have made. It is not yet clear whether this will apply to all CPs or to selected CPs on request.

 

Transparency Requirements in Relation to SMEs

CPs must also publish the following information in respect of any standard form contract for SMEs in an easily accessible and prominent place on its website. New customers must be provided with the same information at the point of sale.

Service Level Agreements (SLAs) which apply in respect of:

  • activation of the service
  • restoration of the service
  • failure to keep an appointment
  • The SLG payment that applies where a SLA is missed
  • Any exceptions to the above

Once the General Condition has been published, the transparency obligations are to be implemented within six months.

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. Their data also shows that there are 5.7 million cases each year of consumers experiencing a loss of their landline or broadband service, and each year engineers fail to turn up to around 250,000 appointments.

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