Complacent UK telcos to be hit with compensation costs

From today, all UK broadband and landline customers will be entitled to compensation for connectivity delays and faults.

It could turn out to be quite a headache for the telcos, as while it will only cost £5 a day to compensate customers for any delays in providing services, the sum of the costs would have been £142 million for the industry across 2018. Today, April 1, is the first day of Ofcom’s new Automatic Compensation scheme.

“We think it’s unacceptable that people should be kept waiting for a new line, or a fault to be fixed,” said Ofcom CEO Sharon White.

“These new protections mean phone and broadband firms will want to avoid problems occurring in the first place. But if they fall short, customers must be treated fairly and given money back, without having to ask for it.”

For customers who have signed up to a new provider, for each day connectivity is not delivered past the agreed upon date £5 will be paid in compensation. The customer will also be given £25 as a one-off payment for the missed appointment. Those who have reported a fault, two working days will be given to the telco to perform any work, but from then on compensation will be set at £8 a day.

In comparison, Ofcom figures suggest there are 7.2 million cases each year where broadband or landline customers suffer delayed repairs, installations or missed appointments. Financial compensation, totalling around £16 million, is generally paid out in 1.1 million of these cases, with customers receiving an average of £3.69 per day for loss of service, and £2.39 per day for delayed installations.

BT, Sky, TalkTalk, Virgin Media and Zen Internet had already signed up to the scheme, which is currently voluntary, though these providers account for 95% of customer relationships across the UK today. EE has theoretically agreed to the scheme, planning to pay automatic compensation next year, as has Plusnet. The compensation outlined in this scheme will be 9X the amount which was received by customer in 2018.

“The voluntary auto compensation scheme is a great step for consumers in the UK, but hopefully, in time, it will become part of the process for all internet service providers as treating customers fairly should be at the core of any organisation,” said Richard Tang, CEO of Zen Internet.

Although this is one step on the journey to a customer service-orientated business model which should be already expected from the telcos, there is plenty of room for error. In theory, customers should not have to do anything to receive the compensation, aside from report the fault, but it is highly likely something will go wrong with the mechanisms over the next couple of weeks.

It will be interesting to see what Ofcom has to report over the short- to medium-term. Hopefully this scheme will force the telcos to perform better, reducing the number of delays, though the amount of paid compensation will also be an interesting comparison to 2018.

Brits wasting £480mn a year on landlines apparently

For some reason there are still people in the UK who insist on having a landline, and it is costing them £480 million a year according to one of those consumer studies.

According to comparethemarket.com’s research, 24% of households have an unused landline, while only 35% of consumer aged younger than 34 actually use one. With the almost ubiquitous penetration of smartphones you really have to wonder what the point is anymore. Just give grandma a feature phone and do away with the pointless bit of kit lurking in the hallway.

“The death of the landline is ‘hopefully’ upon us. Smart phones are slowly but surely making landlines obsolete, and generations Y and Z will likely ensure its final demise,” said Peter Earl, Head of Utilities at comparethemarket.com. “As mobile coverage improves across the country, the number of people who will used a fixed line will inevitably decrease.

“The market is to blame partly for this as a package that includes phone can be cheaper than buying broadband on its own. However, it seems that a huge number of people are currently wasting money with landlines that they never use or have connected in their home. The biggest cost of a having a landline is the line-rental charges – which are often required to have broadband – but the costs of operating that landline are sometimes charged on top.”

There might be a few who are clinging to the idea of a home phone number, though considering youngsters are becoming less likely to communicate verbally nowadays, the writing might be on the wall for the humble landline. In fairness, it is probably the manufacturers fault; you can’t even play Snake on it.