New Ofcom Rules: Too Little, Too Late (but it's a start)

Too late for us (see my very first post on this blog, from 16th Nov. 2016), but I see that Ofcom have proposed a new Automatic Compensation System for broadband faults. The proposal applies to fixed broadband and landline services only. Providers of services for mobiles are considered to be far less of a problem.

About bloody time too, one reader commented against an on line version of the story.

Against strong competition (energy providers, insurance companies, banks etc), telecoms companies are surely the most universally despised amongst their customers. If you haven't lived through your own horror story with at least one company, you won't have to look far to hear tales of appalling experiences from friends or family. We can only applaud Ofcom for trying to make it easier for customers seeking fair treatment from these ethically and competency-challenged companies.

Ofcom's Consumer Group Director, Lindsey Fussell, explains the proposal like this:-

“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.”

Situations Allowable for Compensation

• The Customer’s landline or broadband is not fixed quickly enough after it has stopped working; or
• The 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 said it would set payments “designed to reflect the degree of harm suffered by consumers”, and gave a number of examples:-

If a broadband connection or landline is not fully fixed after two working days the provider would have to pay £10 a day until it is repaired.

If an engineer does not turn up for an appointment or cancels with less than 24 hours’ notice, the payment would be £30. (Clearly inadequate compensation for anyone who has taken a day off work to wait on an engineer who fails to show up, but still better than the current system - i.e. no responsibility at all from the company at fault.)

If a provider fails to start a service on the agreed date, it would have to pay £6 for each day of delay, including the missed start date.

BT, Sky and Virgin Media have jointly put forward a watered-down counter proposal to diminish the impact for them of an already timid scheme. 

The industry scheme offers to pay a minimum of £3 a day for missed service activation, half what Ofcom is proposing.

And £3 a day for delays to repairs starting three days after any loss of service is reported, less than a third of Ofcom’s proposed £6 a day starting from two working days after a loss of service is reported.

A missed engineering appointment would carry a charge of £20, compared to Ofcom’s £30.

Ofcom's statistics reported in relation to the proposal illustrate the scale on which these companies are failing. (Though I suspect the numbers are conservative. How many people would notify Ofcom if an engineer failed to arrive for an appointment? And, based on our experiences with Virgin Media, they don't know what they are doing themselves much of the time.)

As explained in an article in The Independent following the announcement:-

Not before time, given the level of dysfunction in the broadband industry. According to Ofcom’s own figures there are 5.7 million cases of customers experiencing a loss of service every year, engineers miss a quarter of a million appointments, around one in eight new installations are delayed, affecting 1.3m people. 

So would we have been satisfied with the suggested level of compensation for the problems we had with Virgin Media during 2016? Well 'satisfied' wouldn't cover it. Maybe borderline acceptable, if it actually had been the automatic, hassle-free experience asked for by Ofcom. Considering that we had 2 missed appointments for engineers, our original contract with EE cancelled (following advice to them by Virgin Media), and our phone line and broadband connection cut off for more than 6 weeks before I was forced to seek an alternative provider, the numbers would have added up. But, considering that the former Virgin Media employee (someone who had spent years working with customer complaints, amongst other roles) I met while at the Citizens Advice Bureau told me that Virgin never accept responsibility for anything, I don't believe compensation would have been paid so easily even if VM had been obliged to follow Ofcom's new proposal.

Though after what we actually lived through at the hands of Virgin Media, we wouldn't now be satisfied with anything less than the detailed and protracted public shaming of the company, followed by their inexorable decline. Also the entire executive team (plus a number of the people I had direct dealings with) in the stocks in a series of public places throughout the country; that punishment specially reinstated by the government for the occasion. Seems entirely justified to me...

As for how well an automatic compensation process might work? 
It does appear that energy providers are already working to similar rules. We recently had 2 occasions where engineers failed to arrive for installation of a smart meter, arranged via Scottish Power (at their request, by letter). There was a phone call after the first no-show, with an immediate offer of £30 compensation. I had to phone them the 2nd time, but again there was an immediate offer of £30. The first £30 was credited to our account, though it took much longer than had been promised. The 2nd payment was never made.

When the engineer (the work was of course outsourced to another company) arrived for the 3rd appointment, he told me that Scottish Power consistently give them more installations every day than they have the physical capacity to deal with, so it's a system designed to fail. Our installation, which had no complications of any kind, took significantly longer then the stated time to complete the work, which obviously adds to the problem. It's doubtful that any customer ever gets advance notification of a cancelled appointment.

For telecoms companies it appears that Ofcom are finally adopting a tougher approach, presumably in response to the growing level of complaints. Aside from the agreement initiated by Ofcom that BT are required to legally separate from their Openreach division (which builds and maintains the copper and fibre lines used by all telecoms companies except Virgin Media), there have been a spate of record fines.

Most recently there's BT have been fined £42M - the largest ever imposed on a telecoms provider. The Independent reported that as follows, in part:-

BT has been slapped with a record fine of £42m by regulator Ofcom and has additionally agreed to pay rivals in the market as much as £300m after it admitted to breaching rules by failing to compensate other operators over delays to installing Ethernet lines.
Through its investigation, Ofcom found that between January 2013 and December 2014, BT misused the terms of its contracts to cut compensation payments owed to those telecoms providers for failing to deliver Ethernet services on time.
The penalty imposed also includes a £300,000 fine which Ofcom says is because BT failed to provide accurate and complete information to the regulator during the investigation.

Basically, finding ways to reduce the compensation they should have been required to pay to other companies using their Openreach network. Exactly the kind of behaviour we have come to expect from a telecoms company. (A lot of the behaviour sounds criminal to me, where it's not simple incompetence.)

Shortly before that, Plusnet were fined £880,000 for continuing to charge customers for landline and broadband services after they cancelled their contracts.1025 customers were affected, and were overcharged by more than £500,000 in total.

Personally I suspect that's a far more widespread problem than is suggested by these numbers relating to one company. Last year, after EE cancelled our contract with them and cut off our service (following advice to them from Virgin Media), they continued to chase us for payments for months afterwards, relating to the time after they had cancelled our contract - despite assuring me that all was well, and that I could safely ignore all requests for payment every time I phoned. Our direct debit had been cancelled, so no payments were made, but there were threats that our credit rating would be affected before it was finally resolved. The promised letter confirming the contract had been cancelled never arrived.

And in January 2017 EE were fined £2.7M for overcharging tens of thousands of their customers using their mobile network. Ofcom said that although EE “did not set out to make money from its billing mistake, EE had decided not to reimburse the majority of affected customers until Ofcom intervened.”

There have been other fines, and it looks like the trend will continue.

This is of course how big businesses behave. Profit over everything. 'Customer Service' is just a PR catchphrase with no real meaning. It's that casual approach to laws and creative interpretation of regulations which give your company the edge over the competition. It's just more visible with telecoms companies since there is so much direct contact with individual customers. Not until something like the Volkswagen scandal over installing emissions cheating software in their cars does the outlook and ethics of big businesses becomes more apparent. Just as well that the sort of people who run big businesses aren't in any important positions of power and responsibility in western politics. Er....

What I would like to see happen to keep telecoms companies under control, and make them accountable for their failings:-

• Increase Ofcom's funding and resources by 10,000%.
• Allow them to be able to deal with individual customer complaints, and be as user friendly as possible. (At present it's prominently displayed on Ofcom's website that they are unable to deal with individual cases.)

Obviously completely unrealistic, but it would be nice for private citizens to have a champion to stand up for them against mistreatment by telecoms companies. The adjudication service I contacted about our dispute with Virgin Media was the opposite of user friendly.

As record fines pile up, the customers affected remain unlikely to receive adequate compensation, but the situation should improve a little in time, and at least the telecoms companies are getting some of the bad publicity they deserve. 
And although it's negligible in comparison to their profits, in the longer term they'll just make the cost of the fines back by putting prices up.
It's business, not actually a public service. That's what they do.