UK SMBs could walk away from broadband contracts without penalty thanks to new Ofcom code

BT and TalkTalk customers could exit their contract if speeds fall below the minimum guaranteed level

UK businesses are to get more accurate information about the broadband services they receive, under new protections announced by regulator Ofcom that will also allow customers to walk away from providers who fail to deliver what they promise.

UK broadband providers BT Business, Virgin Media, TalkTalk Business, KCOM, Daisy Communications, XLN and Zen - who together provide a service to around two third of small and medium businesses (SMBs) - have all signed up to a new code, which will mean that providers have to give businesses clearer, more accurate and transparent information on broadband speeds before they sign up to a contract.

The regulator said it was concerned about a "speeds gap" between what broadband customers believe they are buying and the actual service delivered. It said that some businesses - particularly in the SMB area - were confused about how the actual speed of their broadband service compared to the headline maximum speed used in advertising. A fifth of SMBs (20 per cent) were not satisfied that they were getting the speeds they had paid for.

"Too many [businesses] buy unsuitable broadband packages because of confusing or insufficient sales information, or are hampered by slow speeds after they've signed on the dotted line," said Ofcom's chief executive Sharon White.

"Where broadband companies fail to provide the speeds they promise, we've made it easier for businesses to walk away from their contracts without penalty. Providers have also agreed to give clear and reliable speeds information upfront so business customers can make more informed decisions," she said.

The seven ISPs who have signed up to the code have agreed to offer their customers the right to exit their contract without penalty if speeds fall below the minimum guaranteed level. They also have to make clear how they manage internet traffic on their network and how this may affect a customer's speed, and what the estimated speeds the particular business will get if they sign up. Finally, they will have to provide further detailed information on speeds in writing to the customer after the sale.

The new code, dubbed Ofcom's Voluntary Business Broadband Speeds Code of Practice, comes into effect from 30 September 2016, in order to allow all providers to put in place the requirements of the code into their working processes.
It applies to all businesses regardless of size and to all standard business broadband services regardless of which technology is used - be it ADSL, FTTC, FTTH, cable, wireless or satellite.

Ofcom said it would carry out ‘mystery shopping' to check if ISPs are complying with both the letter and the ‘spirit' of the code. It has called on all other ISPs who provide business broadband to also sign up to the code.