Should business broadband customers be entitled to compensation too?

Business broadband customers aren’t currently entitled to automatic compensation in the event of outages costing them, but one company is now hoping to change that.

In the UK, broadband outages are very much in.

That’s the verdict of a report by business internet provider Vorboss, which found that 51% of UK businesses with a fixed-line connection experienced at least one outage in the last year (19% reported three or more in the same period), a figure that rises to 60% for businesses based in London.

This is well above the 41% of home broadband users who reported losing connectivity for three or more hours last year, as reported by USwitch.

With the UK economy suffering an estimated £17.6 billion in output lost in the past 12 months, or more than £11,000 per business, Vorboss has called on Ofcom to introduce automatic compensation for businesses affected, much like the scheme which home users have benefitted from since April 2019.

Ofcom introduced automatic compensation for consumers after two years of consultations with the nation’s telcos, many of whom have voluntarily opted into the scheme. This includes the UK’s Big Four providers of BT (including EE and Plusnet), Sky, TalkTalk and Virgin Media, plus some smaller providers such as Hyperoptic, Utility Warehouse and Zen Internet.

It should be noted that “automatic” is somewhat misleading – it is actually automatic entitlement, rather than automatic compensation. It’s still up to customers to report any faults themselves, and any compensation received is provided as credit taken off the next bill.

Last month, the amounts paid out were increased to keep up with inflation:

In the last six months of 2019, £20.7 million in compensation was paid out to home customers, higher than the estimated £8 million that customers received from providers for an equivalent period before the scheme began.

In contrast, Vorboss found that 61% of businesses received no compensation, with many firms not considering it worth the time and effort to ask for it, or simply not expecting to receive any compensation if they did – and looking at the terms and conditions of many business broadband providers, it’s not hard to see why.

For its business customers, BT caps claims for delays to the start of service after 12 days, and compensation for missed engineer appointments is only £10, while in the event of delays to new installations, Virgin Media pays out based on the number of days that exceeded the promised date – from £90 for 1-10 days delay, up to £360 for over 21 days. Beyond 30 days, Virgin Media waives cancellation fees.

Vorboss itself is leading by example, implementing its own compensation scheme for business customers; should any lose internet for more than just four minutes, they will be automatically compensated with at least one day’s worth of service credits; for more than 24 hours, they will receive two months’ worth of credits.

For mobile networks, another solution has been proposed by the Australian government after “potentially billions of dollars [were] lost” during an Optus outage in 2023 – forcing telcos to let customers roam on other networks if their own is down.

However, for businesses seeking restitution for outages, Australia’s Telecommunications Industry Ombudsman demands a laundry list of criteria, including profit-and-loss statements prepared by an accountant covering the outage period, surrounding months, and comparative periods for the previous two years; details as to how their business makes money and how the breach impacted this income; and the steps taken to minimise losses. Hardly a scheme that is going to encourage any but the largest of firms to claim.

Compensation for businesses who suffer significant connectivity outages should be a no-brainer, guaranteeing that firms aren’t penalised for the actions (or inaction) of their service provider. Such a move would likely also encourage savvy providers to beef up their business propositions, customer support and redundancy options, or implement alternative connectivity solutions to avoid significant disruptions to services. Legislation should also ensure that end customers are protected, and increases to business costs do not end up being passed on in the form of price rises.

Based on current approaches though, it’s little wonder then that firms aren’t optimistic about receiving compensation for outages without engaging in a lengthy claim process. While larger firms could likely handle the bureaucratic process of claiming, any fair compensation scheme ought to simplify the process to ensure that businesses of all sizes have an equal chance of succeeding, and clearly define the circumstances under which compensation would or would not be offered.

On paper, Vorboss’ automatic compensation scheme is a compelling proposition for many businesses in London and it will be very interesting to see how many other service providers follow suit.