Home > Consultations > Consultation Documents > Broadband migrations > Executive Summary

Summary

The UK Broadband market

1.1 Broadband has had a profound effect on the way that many people live their lives in the UK today. The ways in which we communicate and the ways we access information and entertainment services have been transformed by ‘always-on’ connections to the internet. The availability of increasingly low–cost, high-speed broadband has been a particular spur to mass market takeup of online services. Today over 10 million UK households subscribe to broadband services, and this number continues to grow at a rapid pace.

1.2 New regulatory and industry initiatives – for example, the unbundling of the local loop – have created a competitive market in broadband, resulting in the availability of cheaper, better and faster services. However, if consumers are to continue to see the benefits of competition, they must be able to shop around – and, once they have found a good deal, to switch broadband providers without undue effort, disruption or anxiety.

1.3 Where consumers don’t have access to processes that let them switch easily, they may suffer inconvenience and distress. If consumers start to think that switching providers carries this kind of risk, the competitive process can be dampened in a way that means all consumers will suffer. Competition is only effective where customers can punish “bad” providers by taking their custom elsewhere, and reward “good” providers by staying where they are. If switching is difficult, competition may, over time, fail to ensure that consumers receive the benefits they should be able to expect.

Broadband migrations

1.4 Ofcom therefore considers that it is vital to support consumers’ ability to switch or “migrate” between products and providers – so that customers can consider available options and change broadband service or provider when they want to.

1.5 The vast majority of broadband service changes go through seamlessly and with relatively little effort from the customer.

1.6 However, Ofcom has seen evidence of increasing numbers of consumers who are finding it difficult to switch between broadband suppliers or to move home without experiencing problems. Customers can find that their broadband service is unavailable for as long as several weeks – and it can take considerable effort on their part to get reconnected.

1.7 Over the last year, many thousands of customers have contacted Ofcom to complain about problems related to broadband migration. The distress caused to affected customers can be substantial, and deserves urgent investigation and action.

1.8 Increasing numbers of customers have recently decided to subscribe to broadband services for the first time and many are now reaching the end of their initial contract period. With the ever increasing range of new packages and better deals, this means that more and more customers will want to be able to switch provider if they find a better deal. This, in turn, points to a risk that more and more customers may face difficulty when seeking to change broadband suppliers. Broadband customers may even decide not to switch rather than risk disruption to their service.

Ofcom Broadband Migration Review

1.9 Given these issues Ofcom launched the Broadband Migrations Review (“BMR”) in April to understand the situation further and consider whether action could be taken.

1.10 At present, most customers who want to switch broadband providers without any downtime need to contact their existing provider to obtain a Migration Authorisation Code (“MAC”) – a unique code that the customer then gives to his new provider, allowing the service to be transferred seamlessly and with little or no disruption.

1.11 Without a MAC, the customer has to cancel his existing service and wait several days before he can place an order with a new broadband provider. There will then be a further delay until the new supplier is able to provide a service – meaning customers might face several weeks without a broadband connection.

1.12 The MAC process was introduced as part of a self-regulatory initiative, and compliance is voluntary. At present, if a supplier chooses not to sign up to the Code of Practice regulating MACs, or does not fully comply with this Code of Practice, then its customers may face difficulties in transferring to another provider or product.

1.13 Ofcom has found evidence of a significant number of customers facing disruption because they have had difficulty obtaining a MAC from their existing supplier. However, the voluntary nature of the MAC process has meant that broadband providers that make it difficult for customers to obtain MACs are unlikely to be in breach of any formal obligations. As a result, Ofcom has, until now, been largely powerless to act.

1.14 Problems also arise where a broadband supplier fails to provide its customers with a working broadband service, but then does not respond to customers’ requests for MACs. A particularly acute example of the difficulties that consumers can face when they are unable to get MACs was the recent withdrawal of broadband provider E7even from the consumer market. Two of E7even’s wholesale suppliers, Tiscali and Netservices, were unwilling to release E7even’s customers once E7even had terminated their contracts. They instead gave customers a choice: to move to a specific broadband provider to resume service quickly – by signing up to a 12-month contract costing £19.99 per month which was higher than a number of alternative providers – or in all likelihood to have no broadband service for several weeks.

1.15 In this case, Ofcom made it clear to both Tiscali and Netservices that it did not consider it appropriate for wholesale providers to restrict customers’ choice of a new supplier. However, these wholesale providers did not change their course of action, and Ofcom was unable to take formal action to remedy the situation due to the voluntary nature of the MAC process.

1.16 Problems with underlying processes have also led to customers facing the risk of loss of service when they want to sign up to a new broadband product, switch broadband suppliers, or are moving home.

1.17 The most significant of these problems is “tag on line”. Here, a customer tries to order broadband, but is told by his chosen supplier that he cannot have service because there is a “tag” or “marker” on the line – which may mean that another supplier is already providing service on that line. The customer may have recently moved home, or may have recently ceased service with a different broadband provider – or may have done neither of these things.

1.18 At the beginning of this year, Ofcom’s contact centre was receiving over 1,000 calls every week from customers who could not get broadband because of tag on line, and could find no one to turn to help them correct this problem. Following requests by Ofcom to address the problem, BT Wholesale has now established a dedicated helpdesk that is helping customers and their broadband providers get broadband where they are affected by tags.

1.19 While longer term work to address the causes of the problem is now underway, Ofcom considers that providers were slow to react to Ofcom’s calls to address the problem when it first started to emerge. Despite the serious problems that tag on line was causing consumers, there was no specific obligation on broadband providers that would have required them to take action. Ofcom considers that this may point to a risk that future technical process problems could cause harm to consumers, and that where this happens action may not be taken quickly enough to address the situation.

1.20 We are also starting to see further process problems that may cause harm to consumers, and we cannot be confident that action will be taken quickly enough to address these. For example, migration processes for customers on unbundled local loops have not reliably allowed customers to switch suppliers without disruption.

Proposed action

1.21 Overall, we are seeing a hugely successful and exciting market for broadband services in which value is being delivered to customers in the form of high-speed services at low prices.

1.22 However, a small but significant number of customers are facing severe difficulty with broadband migrations – for example when they want to change supplier or move house – and market developments suggest that this problem may get worse rather than better.

1.23 Where problems have emerged, Ofcom has up to now had insufficient powers to encourage or compel providers to address the causes of the customer disruption.

1.24 As a result, Ofcom is now proposing to introduce new regulation, in the form of a new General Condition, which will require broadband providers to make sure that customers can obtain broadband service and switch suppliers with minimal disruption.

1.25 Ofcom’s proposed new regulation would have two parts. First, a series of high-level principles would oblige broadband providers to:

• facilitate consumer requests for broadband migrations in a manner that is fair and reasonable;
• ensure that all broadband migrations are carried out within a reasonable period; and
• ensure that all broadband migrations are carried out with minimal loss of service for the customer.

1.26 The proposed new regulation will also require broadband service providers to provide MACs to customers on request and to comply with a specific process for doing so.

1.27 Where a broadband service provider is unable or unwilling to provide MACs to its customers, the wholesale broadband providers involved will need to meet their own obligation to facilitate migration requests.

1.28 In addition, Ofcom is asking the industry to design a new process to allow customers to obtain a MAC from someone other than their existing broadband provider. Ofcom intends to consult again in six months on proposals to make such a process mandatory.

1.29 The new regulation would address each of the three problems identified above. It would require broadband providers to issue MACs to enable customers to switch without disruption. It would require wholesale providers, as well as broadband service providers, to facilitate migrations – helping to address customers’ problems where a broadband service provider refuses or fails to issue MACs, and requiring the whole industry to address any technical systems or process issues which are preventing customers from choosing providers and taking up service without undue effort or disruption.

1.30 The consultation period for these proposals is seven weeks. Ofcom’s consultation guidelines permit a shorter consultation period for comments shorter than the usual 10 weeks on urgent issues such as this. The deadline for responses is 5 October 2006.

• Broadband migrations: enabling consumer choice [pdf]
  Full Print Version

Back to top