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OFCOM planning to make telecom providers pay customers for bad service

“The quality of service in the telecoms sector in the UK is not as high as it should be,” says the market regulator.

Speaking to Business Reporter ahead of the Customer Focus Summit, Ian Macrae, director of market intelligence at OFCOM, told us how the regulator is planning to incentivise telecom providers to improve their customer services.

“Customer service in telecoms trails behind other sectors. It came bottom of the Institute of Customer Service’s Satisfaction Index for the second year in a row in 2016,” says Ian Macrae. “Similarly Which? consumer agency have a trust tracker and it shows high levels of distrust in the telecoms sector, compared to other sectors: 24 % of consumers didn’t trust their broadband providers and 29 % didn’t trust their mobile providers. To put this in context, consumer distrust in the food and grocery sector is only 9%.”

At the same time, reliability and quality of telecom services like broadband or mobile are vital for consumers. “Two thirds of households say they would struggle to function without access to their broadband or mobile services. So when we’ve done qualitative research people say that the disruption and inconvenience caused by these services feels similar to a failure of water supply or a power cut,” explains Macrae. “But unlike power or water, consumers expect landline broadband and mobile not only to be always on, but also to perform consistently and at an expected level.”

To make providers improve their quality of service, Ofcom has decided to introduce a number of measures. “Firstly, on the wholesale side, we don’t think the quality of service delivered by Open Reach is as good as it should be so we are taking actions for higher standards,” says Macrae. 

When it comes to telecom providers, Ofcom is also planning to introduce automatic compensation – a scheme which has already been met with resistance from some providers. “We’re running a consultation on this at the moment, with proposals for a form of financial redress when services fail or operators don’t meet their commitments to fix things. Customers won’t have to ask for that, it will be done as an automatic rebate,” explains Macrae.

Under the proposed scheme, if an engineer doesn’t turned up for a scheduled appointment or cancels with less than 24 hours’ notice, providers will have to pay customers £30 for the missed appointment. If there is a delay in repair beyond two full working days following the loss of service, providers will have to pay £10 to customers for each calendar day the service is not repaired. If there is a delay to the start of a new service, they will have to pay £6 for each calendar day of delay.

“This should be frictionless for the consumer. If we introduce it as a formal regulation then it will be an obligation for providers to automatically do this, so consumers wouldn’t need to claim anything,” says Macrae.

Ofcom estimates that the plans would mean up to 2.6 million landline and broadband customers could receive up to £185 million in compensation payments each year.

The plans, however, haven’t been met with enthusiasm from the providers: “The industry says this is not an area in which Ofcom should intervene, because it’s up to providers to put in place their own schemes which then become part of their customer service offering,” explains Macrae. “There is a possibility that the industry will come together and agree on some guidelines about automatic compensation. That would negate the need for formal intervention.”

There are also fears that the automatic compensation scheme will force providers to increase prices. Ian Macrae says that Ofcom hopes this wouldn’t be the case: “It’s a very price-competitive market – providers compete on price and service offering. I think it’s much more likely that they’ll focus on internal processes to ensure they are not missing appointments. If they focus on making improvements they will consequently not have to pay out compensation payments.”

Macrae, however, stresses that this is not the only way to incentivize telecom providers to improve their customer services. Ofcom has committed to publish an annual Quality of Service report comparing all the leading mobile service provides on a range of QoS metrics, including customer service. The first report was published in April this year.

“People’s dependency on communication services is very high, but they don’t have data on the quality of service. We want to provide that information to improve consumer decision making, and also to incentivise providers to compete on those metrics,” explains Macrae.

He says those providers that perform well are not shy of publicising the information, and those who perform badly are keen to do something about it. For instance, the latest report revealed that Plusnet had the longest waiting times for customer service calls to be answered. “After we published our report, Plusnet came out saying that they are employing 120 new call center staff,” says Macrae.

Macrae says collecting comparative data from telecom providers has been a challenge. However, he hopes that under the new Digital Economy Bill which gives wider powers to the regulator, Ofcom will be able to collect this data more easily.

To see Ian Macrae speak, alongside other speakers, come to the Digital Content Summit taking place on the 23d of May in London.