Can Ofcom’s ‘fairness framework’ improve Britain’s dismal broadband industry?

The regulator’s ideas have merit, but there are potential pitfalls – and this industry has a long way to go before it gets close to the service standards of CEO Sharon White’s new employer John Lewis, writes James Moore

OfCom CEO Sharon White is about to become the boss of John Lewis (Ofcom)

OfCom’s outgoing CEO Sharon White has made it a priority to improve the way broadband, phone and pay TV providers treat their customers – and she doesn’t seem minded to go quietly.

The soon to be CEO of John Lewis has unveiled what the watchdog describes as its “fairness framework”.

For those looking at that slogan and understandably thinking “ugh”, there is meat on the buzzwords’ bones. The framework sets out the type of behaviour the regulator regards as “unfair” and thus liable to provoke disciplinary action.

It has also, commendably, put its finger on why the market so frequently fails its customers: it’s a godawful confusing mess.

It is extraordinarily difficult to work out whether you’d get a better deal by switching, and given that everyone’s probably heard a horror story from those that have taken the plunge if they haven’t actually experienced one themselves, it’s no wonder so many feel it’s a case of better the devil you know.

Interestingly, it sometimes is. A minority can benefit through, for example, being on competitive legacy deals. But, as with many other utilities or utility type industries (energy, banking, insurance) a hefty “loyalty penalty” is more often imposed on those who stay put.

The regulator’s means of addressing that unhappy situation is to require that its charges contact their customers when their initial contracts are up, and every year after that, to explain their options and outline their best available deal.

It has potential to put quite a bit of money back in their pockets but there is a risk. It could serve to discourage switching given the hassle involved in the process: if your provider offers you its best and it’s only a bit more expensive than its rivals, a lot of people will probably feel it’s worth paying the extra to avoid the hassle.

If you decrease the need to compete as a result of that, prices could easily start to rise. It’s what’s called the law of unintended consequences.

Still, the market is suffering from a notable lack of effective competition at the moment. If it were otherwise, there wouldn’t be such a pressing need for the regulator to intervene as it is doing.

White insists that OfCom intends to translate the high-sounding principles and promises she has made the industry agree to into better outcomes on the ground.

Its own survey data shows that it has a long way to go. Figures from April show just 83 per cent of broadband customers are satisfied with the service they’re getting. It looks like a big number but, as I’ve written previously, try turning it around. Close to one in five of us are dissatisfied, which translates into millions of people.

John Lewis, where Ms White is going, would be out of business in a heartbeat if it turned in numbers like that.

The fairness framework needs to get this industry a lot closer to the much vaunted performance standards of her new employer.

If the framework does that, it will have proven itself to be a worthwhile exercise. But Ms White’s successor may need to don a pair of knuckle dusters along the way.