Ofcom launches business broadband code to highlight internet speed misselling

Businesses were being promised more accurate information on broadband speeds on Tuesday, with Ofcom revealing details of a new code of practice that will allow companies to walk away from contracts free of charge if speeds are not as promised.

The regulator said that, under a new code, providers have agreed to give businesses "clearer, more accurate and transparent information on broadband speeds before they sign up to a contract".

It remained a voluntary code, however, with seven specialist providers of broadband to businesses having already signed up. They were listed as BT Business, Daisy Communications, KCOM, TalkTalk Business, Virgin Media, XLN and Zen.

Ofcom said those seven providers serviced around two thirds of SMEs that had standard broadband.

The regulator said the code was borne out of a "worrying mismatch" between what broadband clients believed they were buying and the actual service being delivered.

Research by Ofcom showed not all providers were providing personalised speed estimates to businesses during the sales process - something they were required to do for residential customers. It also suggested 20% of SMEs were unsatisfied with the speeds they were getting.

"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", said Ofcom chief executive Sharon White.

"Providers have also agreed to give clear and reliable speeds information upfront so business customers can make informed decisions", she added.

The key principles of the new code included:

Providing businesses with an accurate estimate of their expected speeds when signing up. This covers both download and upload speeds, which are particularly important to businesses as they can send large amounts of data;

Managing their business customers’ speed-related problems effectively, and offer them the right to exit their contract without penalty if speeds fall below the minimum guaranteed level;5

Giving additional relevant speeds information at the point of sale (for example, how the provider manages internet traffic on its network, and how this might affect a customer’s speed); and

Providing further detailed speeds information in writing to the customer after the sale.

"The new Code of Practice announced by Ofcom is a timely and well-targeted intervention in the business broadband market", said Federation of Small Businesses policy director Mike Cherry.

"To plan effectively, firms need accurate information on what speeds they can expect, and how much they will vary", he explained.

The new code was due to come into effect on 30 September this year, and covered all broadband technologies including ADSL, fibre, wireless and satellite.