Ofcom waves big stick on migration problems
From next Valentine's day, the broadband migration world will be changing. Following a consultation, Ofcom has issued a notice requiring all Communication Service Providers (CPSs) subject to the Communications Act 2003 to assist customers in the migration process.
When you (an "End User") have an ADSL-based broadband service that is provided on a phone line (as opposed to for example a cable TV connection), you buy your service from a "retail" Broadband Service Provider such as BT, AOL, PlusNet, TalkTalk among others. They in turn buy part of the service from a wholesale supplier and build a product bundle which end users can purchase. When you wish to move from one Broadband Service Provider to another one, there are various routes. The simplest of these is a "migration" using a "MAC Code" which you obtain from your current service provider and give it to your new service provider. This will ensure your transfer takes places with minimal interruption to your broadband service.
Over the last year in particular, several problems have become apparent with this process, where Broadband Service Providers, or their wholesalers have refused to provide a MAC Code for a number of reasons. Some providers just do not issue them as a matter of policy, others will only issue them when all remaining charges on the account are settled in full, or when a minimum contract period is completed. There have also been cases of service providers going out of business and users ending up in a situation where they cannot move to a new provider, nor order a new service since the systems detect there is an existing broadband service on the line which needs to be cancelled first.
Ofcom's basis for intervening is that the competitive market forces are being distorted by processes which put up barriers to consumer choice.
"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."Ofcom Statement
From 14th February 2007, Broadband Service Providers will be required to issue consumers and small businesses (of 10 employees or less) with MAC codes regardless of any amounts that may be due or any contractual obligations the end user may be under. Also, service providers presented with a valid MAC code must accept it as a migration order as opposed to a cease and re-provide one (although they are under no obligation to accept any particular customers generally).
Ofcom are also placing a "high-level" obligation under General Condition 22.2 which also applies where the MAC process does not apply, such as when moving home. This requires service providers to facilitate the migration/connection in a manner that is fair and reasonable, within a reasonable period and with minimal loss of the Broadband Service working with any other service providers as appropriate.
The above conditions will require wholesale providers to issue MAC codes to their customers / resellers on request, but it does not require them to provide these directly to End Users. This condition will prevent situations as the current Biscit/V.21/NetServices incident among others from causing so many problems to End Users. Ofcom will continue to work with the industry to try and deal with outstanding issues in conjunction with evaluating the impact of the changes now taking place such as where a code cannot be obtained from a service provider which has gone out of business.
These changes come following a consultation which Ofcom has carried out which attracted responses from several providers including BT, Cable & Wireless, Entanet, Germserv, Scottish and Southern Energy, THUS, Tiscali and several confidential responses. There were some disagreements as to the necessity of specific provisions and the role of a wholesale operator in the MAC process. THUS for example suggested that the compulsory provision of MAC codes should apply generally only to where an end-user makes the request and not where a bulk migration by a reseller is being undertaken from wholesaler to another, especially if the reseller was owing money to the wholesale provider. Ofcom's view was that wholesalers should use existing precautions and due diligence to deal with any credit issues and not to excessively disrupt the services of End Users owing to such a dispute.
BT and Tiscali also did not feel it appropriate for a wholesale provider to issue MACs to end users directly citing interference with contracts with their customers. Several respondents also raised concerns about inappropriate sales techniques some telecommunications companies have previously engaged in for phone services ("slamming"). If there was an alternative route to obtain MACs other than from your service provider, they felt End Users may be able to move away without consultation with the current service provider and without them checking that this is what you really want to do (bearing in mind terms of contract etc). Ofcom, however, was of the view that this was not a valid reason for not developing alternative processes for provision of MAC codes, but points out any such process would need to protect against such abuse.
"Ofcom has seen consumer harm resulting from disputes between wholesalers and their service provider customers, where the wholesaler has deliberately restricted the ability of its customer's end users to switch in an attempt to mitigate the effect of bad debt that has been incurred by the reseller responsible [for example the response of NetServices and Tiscali to the failure of E7even]"Ofcom Statement
In the consultation two "confidential respondents" argued that Broadband Service Providers should be entitled to withhold MACs where a user is in bad debt and other confidential responses argued that withholding of MAC codes should also be allowed where a minimum contract period still applied and that a reasonable charge should be allowed. It is rather worrying such companies were not prepared to comment on this issue openly, presumably for fear of adverse public perceptions.
The Ofcom statement suggests that the steps being taken by BT at present (visibility of broadband status on the BT checker, etc.) "..follows considerable informal pressure by Ofcom over a 12-month period". It further states that it expected these changes would have come sooner if this kind of obligation was in place.
An interesting footnote some readers may not be aware of which is mentioned in the Ofcom statement related to a BT "provide with MAC" option that assists in speeding up the process of a cease/reprovide transfer from an LLU to IPStream/DataStream service which should take effect from 21 December.
In Summary, from 14 February 2007:
- ISPs will be required where possible to provide End Users with MAC codes within 5 working days free of charge; and
- An ISP will not withhold a MAC code for contractual reasons or to assist in the recovery of any debts; and
- If a MAC code is not available for a valid reason, ISPs will be required to explain this to the end user; and
- ISPs will be required to take reasonable steps to assist end users in provisioning/migrating of broadband services; and
- Wholesale providers will be required to provide MAC codes to retail ISPs/resellers regardless of any commercial disputes.
Although the conditions themselves do not exclude cable operators, the nature of the conditions effectively mean this applies to DSL providers.
Ofcom has come under some criticism in recent months for allowing the types of activity that has taken place recently with service providers ceasing to trade and others providing poor services with users being unable to move to an alternative service. As such, this is a very positive move by Ofcom. We hope that it will monitor the situation very closely and should some of the concerns raised by ISPs in the consultation become apparent as problems, we would urge Ofcom to ensure swift action is taken to plug the loopholes.
More information on this can be found here:
Ofcom Statement on Broadband migrations (General Condition 22)