OfCom tries carrot and stick to improve broadband performance as figures show one in six customers unhappy

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Watchdog would like firms that do well to be rewarded with more customers but the stick of forcing them to compensate badly served customers may work better.

Shabby is a good adjective for the quality of service provided by much of Britain’s broadband industry. 

The latest figures from regulator Ofcom show that just over one in six Britons are dissatisfied with the people they pay good money to keep them online. 

That represents a modest improvement – the overall level of satisfaction was at 83 per cent vs 80 per cent last time. 

But it’s worth pointing out that a supermarket group getting that sort of score would be in a panic. In a highly competitive sector, it’s the sort of thing that could drive them out of business. And the improvement certainly isn’t anything to shout about when put in the context of how important the service has become and the impact that the poor performance of broadband providers can have on individuals and their businesses. 

The regulator has correctly recognised that action is necessary to correct their collective failure. The regular publication of the figures is a part of that, but it has also recently taken more concrete steps.  

Perhaps its most important reform is the demand that firms automatically compensate customers when they suffer outages or are hit with delays. This also applies if engineers schedule appointments and don’t turn up. Customers are being given more and better information about the speeds they can expect when they sign up, and the power to walk away form contracts if they have a problem.   

All this means that firms that fail to shape up could find themselves facing a significant financial penalty. Bad news for TalkTalk in particular. It again found itself at the bottom of the service league table.

Ofcom also wants to show its charges a carrot as well as a stick. It hopes that firms scoring more highly will be rewarded with more business.

But do people look at Ofcom’s scores and factor them in when choosing a broadband provider? Is there enough differentiation between the firms at the top and those at the bottom to have a meaningful impact on the business they bring in?

The figures would suggest otherwise and the industry’s fairly dismal reputation may serve to put people off switching full stop. Who wants to risk going without broadband for several days, even with the promise of compensation if it happens?   

As is the case in many markets that could do with an injection of competition to force a change to the slothful behaviour of the companies operating in them (energy, insurance, etc) the phrase “better the devil you know”springs to mind. 

The hard fact is that the stick is of far greater important when it comes to incentivising firms to invest in service than is the carrot. 

With the reforms only recently having come into force, we’ll see whether the one Ofcom has deployed is big enough when next year’s figures are published.