ISPs, outages, and (automatic?) compensation

This is probably one of the geekier posts on the blog...

I'm writing it because of the rather well-publicised Virgin Media outages earlier this week, which were promptly followed by some customers with demands for compensation (including, in at least one tweet I saw, a demand that VM paid the lost profits their business suffered).

(Note that this does not cover compensation for porting issues — that's a separate topic.)

Ofcom's automatic compensation scheme (customer perspective)

There is a voluntary automatic compensation scheme, approved by Ofcom. The scheme's Code of Practice is here.

Some, but not all, ISPs, have signed up

It is a voluntary scheme, and some ISPs, but not all, have signed up to it.

As of today, the ISPs who have signed up are:

  • BT
  • Hyperoptic
  • Sky
  • TalkTalk
  • Utility Warehouse
  • Virgin Media
  • Zen Internet

Customers of those ISPs should receive compensation payments automatically if any of the trigger events are met.

Trigger events

They key thing here is "the trigger events". Not every drop or outage or delay or problem triggers compensation.

For example, if an ISP is delayed in fixing a problem, you should be paid £8 for each full day of delay within 30 days of resolution (or termination of the service), but this only applies to a total loss of service (meaning that you are unable to "access the public internet"), which is not fully fixed after two full working days:

  • A full outage for a day? No automatic compensation.
  • A slower line? No automatic compensation.
  • A flappy line? Arguable, but probably not automatic compensation.

Automatic compensation is not payable in respect of any planned network service outage which is notified to the customer in advance.

Limits

Unless one or more of the exceptions (below) applies, ISPs are required to pay compensation for 60 days if an outage continues for that time.

After 60 days, an ISP can stop paying compensation, as long as it uses reasonable endeavours to mitigate the impact caused by the outage — for example, by providing a cellular alternative to a fixed line outage where it is a reasonable to do so.

If it is not possible to mitigate the impact using reasonable endeavours (in other words, you cannot unreasonably refuse to accept a reasonable mitigation), the ISP will continue to pay compensation.

Exceptions

The voluntary automatic compensation scheme contains a number of exceptions. This includes where the customer is at fault or is in breach of the terms under which the relevant service is provided, and fraudulent, frivolous or vexatious complaints, and — importantly right now — that:

it was not reasonably practicable for the Communications Provider to avoid an obligation arising to pay compensation due to the effects of an event for which emergency regulations have been made under Part 2 of the Civil Contingencies Act 2004.

Ofcom has stated that:

Given the unique circumstances presented by the coronavirus, Ofcom’s view is that it would be legitimate for providers not to pay automatic compensation just as if the civil emergencies exception in the Automatic Compensation Scheme applies.

In other words, if you get compensation for an outage at the moment, you'll be lucky!

ISPs and compensation: general conditions, and contracts

If you run an ISP, there are two things you'll want to bear in mind when it comes to service outages and compensation: what is required of you under the General Conditions, and the position under your contract with customers.

General Conditions

Under GC C2.2, all PECS and PECN providers are required to public "clear and up to date information" about certain things. This includes "any compensation and/or refund policies, including specific details of any compensation and/or refund schemes offered"."

You must send all the required information (including this information about compensation) to any end user who reasonably requests it, and you have to put it "in an easily accessible and reasonably prominent" place on your website.

You are also required to:

  • have "fully documented" procedures to ensure that customers are made aware of this information (and there's a specific expectation that you will include it in "sales and marketing literature"); and
  • ensure that your enquiry and helpdesk staff are aware of the information, and can respond to complaints and enquiries.

In addition, if you supply Internet access to SME customers, you must include certain information in your contract and on your website, including the existence of any applicable service level agreements or guarantee or the fact that no service level agreement or guarantee applies.

Your contract

Aside from the requirements under the General Conditions, you'll want to know whether an outage amounts to a breach of contract and, if so, what the implications are of that.

If you are promising a 100% always working service, any outage could be a breach. But you'd be brave to be offering that, unless it was part of a particular (probably quite expensive) service level guarantee, and, if you are offering it, I expect you'd be very clear about what it covered, and what was out of scope.

Unless you intend to offer this, it would make sense to be clear, contractually, that you are not guaranteeing that your service is always going to be available.

You would also want to look at:

  • your liability provisions, including triggers for claims, and whether you can successfully incorporate any exceptions to your liability, or lessen or cap your liability.
  • any provisions which might let a customer terminate, and if so, how and when those apply.

Bonus content: reporting obligations

Aside from dealing with customers, under s105A Communications Act 2003, network providers are required to:

"take all appropriate steps to protect, so far as possible, the availability of [their] public electronic communications network".

Under s105B, providers are required to notify Ofcom of:

"a reduction in the availability of a public electronic communications network which has a significant impact on the network".

Ofcom's guidance set out what it expects in terms of thresholds for reporting. Check out our detailed analysis of this.

In addition to numerical thresholds, Ofcom considers that s105B implies a reporting obligation on an "urgent" basis for all "[i]ncidents attracting national mainstream media coverage" and, on a non-urgent basis, incites that are "reported in the media (local, national or trade news sources)".

So now would be a good to revisit and refresh, if needed, your reporting processes.