Ofcom faces call to extend automatic compensation scheme to businesses

Under the scheme imposed by UK comms regulator Ofcom, a cascade of automatic compensation payments must be made by communications service providers to their residential customers following an outage, missed appointment, or delay to the start of a new service. Its introduction seems to have forced CSPs to raise their game.

Vorboss doesn’t compete in the consumer space but, as a B2B challenger with its own fibre network, it apparently sees a business advantage from its competitors being put under equivalent regulatory pressure. Accordingly, Vorboss commissioned a report from analyst firm Assembly Research, which drew upon data from the ONS as well as a YouGov survey commissioned in February 2024, and used that report as the basis for a letter it sent to Ofcom boss Melanie Dawes.

“Key findings indicate that the UK economy has suffered a loss of approximately £17.6 billion in economic output over the past 12 months due to connectivity outages, with the London economy alone accounting for around £5.7 billion of this loss,” said the letter. “The report also reveals that, despite the significant productivity impact of outages, businesses have little confidence in their contractual SLAs and SLGs. The majority (61%) of businesses impacted by an outage did not receive any form of compensation.”

This call from Vorboss coincides with its own voluntary introduction of automatic compensation. The decision to send this letter and publicise it is an interesting one, since automatic compensation is presumably a significant competitive differentiator for the company. On the other hand, supporting the initiative with public market research and a letter to Ofcom clearly comes with distinct publicity benefits.

“As the data in this report shows, the productivity uplift that would come from improved network quality is massive,” said Vorboss CEO Tim Creswick in the accompanying press release. “We should all be incentivised to compete on quality – that would force an uplift in network performance, and in turn drive a much-needed economic boost.

“Ofcom's introduction of automatic compensation in the consumer market has been a success, pushing service providers to improve quality, while giving customers reassurance that compensation is real and tangible. If the scheme was extended to include businesses, we would see the same benefits, along with a significant productivity boost to London and the UK economy through reduced outages.”

If automatic compensation for consumers was such a great idea it’s hard to see how that same logic shouldn’t apply to businesses. The report claims half of businesses with a fixed business connectivity contract reported that they experienced at least one loss of service in the past year. The Market leader is BT Business which, to the best of our knowledge, doesn’t currently offer automatic compensation. It’s therefore reasonable to assume that, as things currently stand, its introduction would impose a significant extra expense.