Challenges remain in the communications market, but complaints fall

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Challenges such as landline mis-selling, switching, broadband speeds, silent calls and complaints handling remain in the communications market, however complaints to Ofcom about telecoms services have fallen by almost 20 per cent per cent over the past four years, new Ofcom research reveals.

The report also reveals that broadband take-up has increased significantly among older people, and that more people say that they intend to get the get the internet in the next 12 months.

Ofcom’s fifth annual Consumer Experience Report reveals how the communications market has matured in the last five years, delivering significant benefits for consumers with advances in competition, choice, take-up and lower prices. The report also outlines the main challenges Ofcom needs to address in the communications market to ensure that consumers can get the most from choice and competition in the sector.

Competition in the market

In the five years that Ofcom has published this report, the competitive landscape in the UK has changed: Five years ago only four per cent of households had their landline with providers other than BT or a cable provider, now 26 per cent take their landline from an alternative provider;

In mobile, call charges from mobiles have fallen by almost a half (15.1 pence per minute to 8.8 pence per minute) driving take-up and use – consumers are more likely to own a mobile phone than to have a landline at home. Ninety one per cent of people now own a mobile phone compared to 80 per cent in 2006; and

The fixed broadband market has been transformed, with the number of unbundled lines rising from 123,000 in September 2005 to 7.23 million in October 2010, meaning greater choice of provider for consumers. Seventy three per cent of people now have broadband at home compared to just 45 per cent in 2006.

Older consumers driving broadband take-up

Take-up of broadband continues to grow, and this is being driven by take-up among older people. Broadband take-up in the UK grew by 3 percentage points from 2009, but among 65-74s it grew by 9 percentage points and among over 75s by 8 percentage points.

The proportion of consumers stating they do not intend to get the internet in the next 12 months has fallen from 20 per cent in 2009 to 15 per cent in 2010.

Making the markets work for consumers

As well as our work on competition and choice in the communications market, Ofcom is focusing on ensuring that the markets work in the interests of consumers.

Complaints about telecoms services and providers have fallen by approximately 20 per cent from 2007 to 2009 (135,600 to 106,500) and remain stable this year (100,000 to the end of November).

However, there are areas that remain of concern, which Ofcom is focusing on. These include:

Switching processes

The research shows that levels of switching have declined over the past four years (in mobile, 8 per cent switched provider in 2010 complared to 13 per cent in 2006, owing in part to longer contract lengths), despite the majority of people finding it easier to switch providers (for example, 86 per cent of consumers found it easy to switch broadband providers in 2010 compared to 73 per cent in 2008).

Ofcom is currently reviewing switching processes across the communications sector to assess whether the current processes deliver good consumers and competition outcomes. Ofcom’s aim is to make switching easy and hassle free for consumers and to ensure that switching processes do not get in the way of providers competing vigorously with each other to deliver benefits to consumers in terms of lower prices, greater choice and innovation and value for money.

Broadband speeds

Ofcom’s consumer research shows that broadly, consumers remain satisfied with their communications services and providers (ranging from 80 per cent satisfaction with broadband providers to 92 per cent satisfaction with mobile providers). However, there has been a increase in consumer dissatisfaction with broadband speeds (from 14 per cent 2009 in to 19 per cent in 2010).

Ofcom published the UK’s first comprehensive broadband speeds research in 2009 and published a follow up report in July 2010, which showed that the UK’s average actual fixed-line residential broadband speed has increased by over 25 per cent in the past year from 4.1Mbit/s to 5.2Mbit/s.

However, the move to faster headline speeds has led to a growing gap between the actual speeds delivered and the speeds that some ISPs use to advertise their services. Ofcom recently published a revised voluntary code of practice which aims to ensure that consumers are given an estimated speed range that they can achieve on their broadband line. The new code also allows consumers to leave their contracts should they achieve speeds significantly below what they were advised at point of sale, if steps taken by providers to improve speeds are unsuccessful.

Ofcom has also provided examples to the advertising regulatory bodies of how broadband speeds might be advertised, to ensure that consumers have a much better expectation of the speed they are likely to achieve.

Complaints handling

Ofcom’s advisory team continues to receive a high number of complaints about poor customer service, for example, complaints being ignored, refusal to escalate complaints to managers and incorrect information being given.

All communications providers in the UK are required to belong to an alternative dispute resolution service (ADR) – CISAS or Otelo. Following its review of complaints handling procedures, Ofcom confirmed new regulations which will come into force next year requiring providers to comply with an Ofcom Code of Practice which includes having in place a dedicated complaints process which must be well-publicised. Providers will also have to consumers whose complaints have not been resolved within eight weeks to inform them of their right to take their complaint to ADR and include information about the availability of ADR on all paper bills.

Ofcom is also aiming to publish details of complaints made by consumers to Ofcom on a provider specific basis during the course of next year. We have also commissioned a market research survey on customer service, to inform consumers about the likely nature of day to day contact with a provider and we hope to publish this research alongside the publication of our complaints data.

Silent calls

Despite the overall decline in complaints to Ofcom, complaints about silent calls have increased (6600 in 2009 compared to 8600 in 2010 to date). Ofcom recently confirmed that from 1 February 2011, companies will no longer be able to call consumers without the guaranteed presence of a live operator more than once a day, reducing the likelihood of receiving repeat silent calls.

The Government also recently increased the maximum penalty available to Ofcom for breaches of its persistent misuse (including silent calls) regulations from £50,000 to £2 million.

Ofcom has an open monitoring and enforcement programme that seeks to address consumer harm created by silent and abandoned calls. This programme monitors complaints and actively engages with stakeholders. Where informal enforcement action is not effective, Ofcom proceeds to a named investigation and notification and/or fine. This has resulted in action against nine companies to date resulting in financial penalties, including the then maximum of £50,000 to Barclaycard in October 2008.

Landline mis-selling

Landline mis-selling remains one of the most complained about issues to Ofcom. However Ofcom has identified that a significant number of alleged ‘slamming’ complaints received have been driven by process related errors rather deliberate mis-selling. For example, a consumer who is moving home asks their provider to transfer their existing service to the new address, but deficiencies in the switching process mean that the wrong line is targeted and a neighbour’s line is transferred instead. Ofcom has been working closely with the Office of the Telecoms Adjudicator, Openreach and industry as a priority to design and implement a solution to these systems errors.

Ofcom is also addressing mis-selling by taking enforcement action against companies generating the most complaints, using new regulations introduced this year which prohibit mis-selling. Action taken this year includes investigations into Continental Telecom, TalkTalk Group and KCT.

Business Consumer Experience

Ofcom has also today published research into how business consumers use telecoms services and how satisfied they are with them.

The research found that almost four in five (78 per cent) of business consumers regularly work out of the office, either at home and/or while travelling, and over half (58 per cent) are using mobile phones to access emails and the internet.

The majority (68 per cent) expect their spend on communications services to remain stable over the next 12 months, and 22 per cent expect an increase, suggesting that communications services budgets are remaining intact despite the economic climate.

The majority of business consumers are satisfied with their overall experience of their communications providers with 91 per cent satisfied with their mobile provider, 85 per cent satisfied with their landline provider and 83 per cent with their internet provider.

However, business consumers showed concerns about internet speeds that they have paid for (only 59 per cent are satisfied) and mobile internet services via a dongle (only 68 per cent are satisfied).

The Consumer Experience and Business Consumer Experience reports can be found here: http://stakeholders.ofcom.org.uk/market-data-research/market-data/consumer-experience-reports/consumer-experience.