Customers with poor internet service could get up to 185 million in compensation, according to new Ofcom plans.
The scheme is designed to improve customers' quality of service, and would involve reimbursing them for inconveniences such as cancelled appointments, service delays and outages.
Ofcom's proposal is now under consultation until 5 July, with a final decision expected to be published around the end of the year. As the country's three biggest providers, Virgin Media, BT and Sky have clubbed together to propose offering automatic compensation as past of an industry-standard voluntary code of practise.
This proposal has been rejected by Ofcom, however. "At this stage, we do not think that the industry proposal sufficiently meets our concerns when quality of service falls short, but we welcome the opportunity to continue this dialogue with industry in parallel to this consultation."
Ofcom said that the new proposals could leave up to 2.6 million people better off, and could result in a combined payout to customers of 185 million.
"Telecoms services are thought of by consumers as an increasingly essential part of their home and business life," the telecoms watchdog said. "Given the growing importance of telecoms services and the reliance consumers place on them, it is important that they should be able to obtain redress quickly and easily when they suffer problems with their service."
According to the regulator, a significant amount of people are affected by broadband and landline issues annually; almost a quarter of a million engineer appointments are missed, Ofcom said, and over one million installations are subject to delays, with more than five million customers experiencing a loss of service every year.
Under the proposed rules, customers would automatically either receive a cash payment or have money deducted from their bill under certain circumstances. This would include a 10 refund for every calendar day that a faulty service goes unfixed, 30 for every time an engineer appointment is cancelled within 24 hours or missed altogether, and 60 for every day that a company misses beyond the stated start date of a new service.
It's not just residential broadband users, either; SMBs are set to benefit from the new plans too. According to Ofcom, residential broadband services are used by around a third of SMBs, meaning they will automatically benefit from the proposed rules.
In addition to this, Ofcom is advising that the two-thirds who take out business-grade broadband contracts be provided with more information of what quality of service they can expect and what compensation they are entitled to when problems arise.
"This proposal reflects that SMEs can negotiate bespoke terms and there are already standard business contracts currently on offer that provide compensation for a number of different issues, which are not available for residential consumers," Ofcom said.
"Our approach should help enable SMEs to take advantage of these and secure compensation for the service problems they encounter."
