Clarity for businesses baffled by broadband speeds
26 January 2016
- UK businesses will be better protected on broadband under new Ofcom Code
- New rights to exit contract penalty-free if speeds fall below guaranteed levels
UK businesses will receive more accurate and reliable information on the broadband speeds they should receive, under new protections announced by Ofcom today.
As part of a new Ofcom Code, providers agree to give businesses clearer, more accurate and transparent information on broadband speeds - before they sign up to a contract.
Signatories to the voluntary Code also commit to manage any problems that businesses have with broadband speeds effectively, and allow customers to exit the contract at any point if speeds fall below a minimum guaranteed level.1
Seven of the UK's specialist broadband providers for businesses - BT Business, Daisy Communications, KCOM, TalkTalk Business, Virgin Media, XLN and Zen - have signed up to the Code. They together provide a service to around two thirds of SMEs who have standard broadband.2
A worrying 'speeds gap'
Ofcom is concerned about a 'speeds gap' - the mismatch between what broadband customers believe they are buying and the actual service delivered.
Ofcom research found that some businesses - particularly small or medium sized enterprises (SMEs) - were confused about how the 'actual' speed of their broadband service compared to the 'headline' maximum speed used in advertising.
Not all providers were giving personalised speed estimates to businesses during the sales process, the study found, while a fifth (20%) of SMEs were not satisfied they were getting the speeds they had paid for.
Sharon White, Ofcom Chief Executive, said: "Ensuring consumers get the best possible communications services is Ofcom's top priority. And that includes businesses getting the broadband speeds they need. Yet too many buy unsuitable broadband packages because of confusing or insufficient sales information, or are hampered by slow speeds after they've signed on the dotted line.
"Where broadband companies fail to provide the speeds they promise, we've made it easier for businesses to walk away from their contracts without penalty. Providers have also agreed to give clear and reliable speeds information upfront so business customers can make more informed decisions."
Mike Cherry, Policy Director for the Federation of Small Businesses, said: "A dependable broadband connection is now essential for almost every aspect of modern business life. Everything from driving online sales, customer relations and accessing data held in the cloud relies on a stable broadband connection. Yet small business dissatisfaction with broadband providers appears to be widespread and deeply felt.
"The new Code of Practice announced by Ofcom is a timely and well targeted intervention in the business broadband market. To plan effectively, firms need accurate information on what speeds they can expect, and how much this will vary. Business owners should be able easily to compare suppliers and exit a contract early if their communications provider does not deliver the speeds promised."
Scope and key principles of the Code
Under the Code, businesses taking a new broadband service will, for the first time, enjoy a similar level of protection as residential broadband users - whose interests are already safeguarded under an existing Code.3
The new Code for businesses applies to all businesses, regardless of size, and to all standard business broadband services across all technologies (ADSL, Cable, Fibre to the Cabinet, Fibre to the Premises, Wireless and Satellite).4 It has also been tailored to meet the specific needs of businesses.
The seven internet service providers who have signed up promise to:
- provide businesses with an accurate estimate of their expected speeds when signing up. This covers both download and upload speeds, which are particularly important to businesses as they can send large amounts of data;
- manage their business customers' speed-related problems effectively, and offer them the right to exit their contract without penalty if speeds fall below the minimum guaranteed level;5
- give additional relevant speeds information at the point of sale (for example, how the provider manages internet traffic on its network, and how this might affect a customer's speed); and
- provide further detailed speeds information in writing to the customer after the sale.
Ofcom's Voluntary Business Broadband Speeds Code of Practice comes into effect from 30 September 2016 to give providers time to put in place the requirements of the Code. Ofcom is inviting all providers of business broadband to sign up to the Code.
Mystery shopping, to check if ISPs are complying with both the letter and spirit of the Code, will be carried out once it is fully implemented. Ofcom will also continue to assess the Code's effectiveness while considering other ways to improve communication of broadband speeds.
NOTES FOR EDITORS
1. Example: A small business owner buys a broadband package advertised as up to 17Mbit/s and is given a personalised estimated download speed of 11.3Mbit/s -15.6Mbit/s. They are also given a minimum guaranteed speed for their specific line of 7Mbit/s. If the actual speed achieved is lower than 7mbit/s, and remains so after both parties have tried to fix the speed problem, the business will be able to exit the contract without penalty. Under the Code providers are obliged to manage any speed related issues effectively.
2. This statistic was extrapolated from market research and should be regarded as an estimate. Standard broadband in this instance relates to ADSL, Cable and Fibre-to-the-Cabinet services.
4. The Code does not apply to technologies and services where speeds are guaranteed and/or the customer has a dedicated connection, as in those cases the speeds achieved by the services are clear to business customers at point of sale (e.g. Ethernet first mile (EFM), Ethernet over FTTC (EoFTTC) and leased lines).
5. The 'right to exit' clause of the Code is technology specific. It does not apply to FTTP and cable connections because by the very nature of the technology used, speeds performance is less variable.
6. The ASA, acting upon joint research with Ofcom, recently announced plans to clarify price information in broadband advertising.
7. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications, wireless communications and postal services.
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