Compensation Scheme for Poor Broadband Service Pays out £20m

Broadband and landline customers received £20.7 million in compensation last year after providers failed to meet deadlines for fixing outages and initiating services.

The Automatic Compensation Scheme was launched by telecoms regulator Ofcom and five internet service providers—BT, Sky (including NOW Broadband), TalkTalk, Virgin Media and Zen Internet—last April. The providers were joined by Hyperoptic in October 2019 and Utility Warehouse in February 2020.

The scheme was developed by Ofcom after the regulator found seven million people are let down by their broadband and landline providers each year. That includes 250,000 appointments missed by engineers and 1.3 million late installations. Before the code launched, just one million consumers received compensation each year for the failures. 

With providers compensating just 15% of households they failed, redress payments worked out at just an average of £3.69 per day for service outages and £2.39 a day for delayed installations.

Now customers automatically receive £8 a day in compensation from participating ISPs for any outage that isn’t fixed within two days. Customers also receive £25 if an engineer doesn’t arrive on time or cancels without at least 24 hours notice. Providers must also pay out £5 a day if a new service doesn’t begin on time.

Compensation payments totalled £20.7 million between July and December 2019, Ofcom announced. That’s more than double the £8 million broadband and landline providers issued in compensation in the six months before the scheme began.

Ofcom paused Automatic Compensation Scheme in April under the civil emergency exemption as the coronavirus pandemic disrupted home visits. Most signatories to the code have resumed automatic compensation payments for at least some service issues, Ofcom said in June, adding that it was “keeping the situation under close review.”

Meanwhile, some major ISPs, including EE, Plusnet and Vodafone, have yet to sign up to the scheme, leaving hundreds of thousands of customers without guarantee of compensation when their service goes down. Both EE and Vodafone previously suggested they would implement automatic compensation by this summer, while Plusnet said in February that it would sign on “as soon as possible.”

Other popular providers which haven’t joined include KCOM, Post Office and SSE. Ofcom has previously said it would “welcome” new signatories to the code.