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New broadband protections for businesses from today
UK businesses will receive more accurate and reliable information on broadband speeds before they sign up to a contract, under new protections that come into force recently.
- More reliable information on broadband speeds under new Ofcom Code
- Right to exit contract penalty-free if speeds fall below guaranteed levels
As part of a new Ofcom Code, providers also commit to resolve any problems that businesses have with broadband speeds effectively, and allow customers to exit their contract at any point if speeds fall below a minimum guaranteed level.1
So far, BT Business, Daisy Communications, KCOM, TalkTalk Business, Virgin Media, XLN and Zen have signed up to the voluntary Code. Together, they provide a service to around two thirds of small or medium sized enterprises (SMEs) who have standard broadband.2
Addressing the ‘speeds gap’
Ofcom research found that some businesses - particularly 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.
Under Ofcom’s new 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
Lindsey Fussell, Director of Ofcom's Consumer Group, said: “Ofcom's job is to make sure that everyone across the UK is getting the best possible communications services. We are concerned that too many businesses are not receiving the broadband speeds they expect when they sign their contract.
“So broadband companies have agreed to give clear and accurate information on speeds upfront so business customers can make more informed decisions. We've also made it easier for businesses to walk away from their broadband contract without penalty if speeds fall below the levels guaranteed by their provider.”
Mike Cherry, National Chairman for the Federation of Small Businesses, said: “A broadband service that small businesses can rely on is essential for a modern business. It’s impossible to underestimate how much this matters to small business owners, whose sales and customer relations so often rely on a stable connection. FSB members are clear about their need for clear and accurate information about both the download and upload speeds they can expect at the point of sale.
“The new Code of Practice coming into effect this week is a timely and well targeted intervention in the business broadband market by Ofcom which FSB is pleased to support." With more accurate and transparent information at the point of sale, small businesses right across the UK will be able to make better decisions. The ability to walk away from a contract if speeds fall below guaranteed levels will be especially welcomed by business owners.”
Scope and key principles of the Code
The new Code applies to all businesses, regardless of size, and to all standard business broadband services across all technologies (including Fibre to the Cabinet and Fibre to the Premises services).4
The internet service providers (ISPs) who have signed up promise to:
- provide businesses with an accurate estimate of their expected speeds before signing up. This covers both download and upload speeds, which are particularly important to businesses as some may need to send large amounts of data;
- manage their business customers’ speed-related problems effectively;
- 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 is inviting all providers of business broadband to sign up to the Code. Mystery shopping will be carried out, to check if these providers are complying with both the letter and spirit of the Code, and Ofcom will also continue to assess the Code’s effectiveness while considering other ways to improve communication of broadband speeds.
NOTES FOR EDITORS
- 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.
- 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.
- Ofcom's Broadband Speeds Code of Practice for residential consumers was strengthened in 2015.
- 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).
- The ‘right to exit’ clause of the Code is technology specific. It does not apply to FTTP and cable connections.
- The ASA, acting upon joint research with Ofcom, will enforce new rules from 31 October 2016 to clarify price information in broadband advertising.
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