Better broadband for small businesses
25 June 2015
Ofcom has today called for joint action between the regulator, industry and government to improve broadband services for smaller businesses.
In a detailed study of how well small businesses are served by their communications services, Ofcom has identified several areas that need to be addressed by a combination of regulation, public policy and action by broadband suppliers.
The UK's 5.2 million SMEs (small and medium-sized enterprises of fewer than 250 employees) are critical to driving economic growth. They constitute 99.9% of UK businesses, accounting for 60% of private-sector employment and 47% of business revenue. High-quality communications services are essential to their ability to drive the digital economy.
Today's report, Broadband Services for SMEs, finds that 83% of small businesses consider communications services to be fundamental to their business, and 78% use a fixed broadband connection.
While 85% of SMEs feel their business needs are well catered-for by the communications market, a significant number expressed concerns around broadband speeds, availability, quality of service and choosing between providers.
New speeds agreement
Research by Ofcom(-1-) has found that a fifth of smaller businesses are unhappy at not being able to access the broadband speeds they were led to expect.
To help address this problem and improve the level of information and advice about actual broadband speeds, Ofcom has today announced an agreement from three of the UK's largest suppliers – BT, TalkTalk and Virgin Media, which account for the majority of business broadband users – to work on a new Code of Practice for business broadband services.
Consumers are currently protected by a Code of Practice on Broadband Speeds, which is signed by major consumer broadband providers. This Code requires those selling an internet service to give the customer – whether in the shop, over the internet or on the phone – an accurate estimate of the actual speed they will receive.
The consumer Code also requires providers to resolve technical problems that might reduce broadband speeds, and to allow customers to leave their contract if speeds stay below a minimum level.
The Code for business broadband is expected to cover similar areas, but may need to be tailored to particular needs of smaller businesses – for example, by offering commitments relating to upload speeds (which are particularly important to many businesses) as well as download speeds. Ofcom aims to publish the Code in the autumn.
SMEs are less well served by superfast broadband than residential users. Ofcom found in June last year that only 56% of SME premises had access to superfast broadband, compared to 75% of all UK premises.(-2-)
Superfast broadband coverage is rising, as operators such as BT and Virgin Media extend their fibre networks, and the Government continues its £780m programme to extend superfast broadband to 95% of UK premises by 2017.(-3-)
However, Ofcom is concerned that not all SMEs will benefit under current industry and Government plans. Ofcom's analysis suggests that by 2017, when 95% of all premises are due to have access, around 18% of SMEs may still not be able to receive superfast broadband.
This is partly because it usually costs more to connect business premises than households, and because current deployment plans are designed to maximise coverage among as many premises as possible.
So Ofcom is today recommending to the Government – which is reviewing the universal telecoms service, and planning for future superfast roll-out – that explicit targets for business coverage are set to help ensure SMEs have access to the right technology.(-4-)
Opportunity for faster repairs
Most SMEs are not being given the option of paying for faster fault repairs, even though a working broadband connection is essential to many companies' ability to run their business.
Openreach, the company that installs and maintains connections to BT's network on behalf of competing providers, offers an enhanced service to retail providers under which faults can be repaired within six hours of being reported. However, most providers do not make this option available to business broadband customers.
Ofcom believes SMEs should be able to decide for themselves whether they want to pay for this level of service, which might be expected to cost a few pounds extra per month. Ofcom is now discussing this with providers and considering further action as part of this year's Strategic Review of Digital Communications.
Ofcom is taking additional steps, as part of an ongoing action plan to help improve the accessibility of communications services for small businesses.
Research shows that around half of SMEs struggle to compare information about suppliers and tariffs. This is compounded by a lack of information on some operators' websites about prices, services and contracts.
Ofcom will therefore be taking action to make sure that providers are complying with their regulatory obligations to provide information on their websites.
Businesses should also be able to switch provider easily, so that competition in the market works effectively. On 20 June, Ofcom introduced new rules that mean businesses with fewer than 10 employees (as well as consumers) can switch provider over BT's network by only dealing with their new supplier.
Sharon White, Chief Executive of Ofcom, said: "Small businesses are essential to the UK economy, and most rely on telecoms services to carry out their everyday work. But some companies lack the resources or expertise to get the services they need.
"We've made clear we want to see better broadband coverage, quality of service, information and advice for all consumers, and that means business users too. So we are taking action alongside industry and the Government to make that happen."
Last year, Ofcom launched a dedicated online portal with advice for businesses on choosing and switching provider, navigating and negotiating contracts, and resolving complaints. See ofcom.org.uk/adviceforbusinesses.
NOTES FOR EDITORS
1.-Research numbers, except where indicated, are from SME Experience of Communications Services, a report by Jigsaw Research for Ofcom published in October 2014.
2.-Source: Ofcom's Infrastructure Report, December 2014.
4.-The Chancellor of the Exchequer announced in the March 2015 budget statement an intention to introduce a broadband Universal Service Obligation (USO), which would ensure that virtually all UK premises are able to access broadband. Ofcom is recommending that this should be specified in a manner that benefits SMEs as well as residential consumers – for example by including a minimum upload speed.
The Government is also currently designing the specification of phase 3 of its Broadband Delivery UK programme. One option is for this to include specific SME targets, and/or targets for business parks and commercial districts.