Ofcom’s Christmas Gift to You All

Simon Woodhead

Simon Woodhead

17th November 2021

By Pete Farmer

Readers who are members of Comms Council UK will have a passing familiarity with what’s coming next month, as there has been a few webinars on the subject. For those that are not yet fully aware, the UK’s telecommunications regulator, Ofcom, has left some presents under the tree for you since last year. 

There are a whole bunch of minor ones which I’ll address with bullet points at the end of this piece. There are however, three major ones which may require more of your attention.

All of the new rules come into effect the day before my birthday; if I were a suspicious conspiracy-theory reading type, I might develop a complex… but the reality is Ofcom just added 12 months exactly, from the date of their Statement which was mid-December last year. 

Ragged End Contracts

Officially, these are known in regulatory circles as “non-coterminous linked contracts”. There is not a new rule on this, per se, but instead a change in how Ofcom will interpret General Condition of Entitlement (“GC”) C1.8 from 17th December. 

To understand why this is a problem, one needs to enter the mind of a consumer protection policy type. Ofcom are addressing the harm that can be caused by someone like Sky selling bundles of services with interdependencies, such as discounts, on their broadband and satellite TV, but where the satellite TV and broadband have different end dates. 

That becomes a disincentive to switch, which is already a prohibited behaviour in relation to “procedures for contract termination”.

Unfortunately, GC C1.8 is one of those that applies to small businesses and not-for-profits. 

Those that have known me for some time will also know I have been quite vocal on my criticisms of measuring business size (for the purposes of consumer protection) by way of employee numbers. This is because there is no formal guidance as to whether its employees at the time of contract, time a dispute or other event arises etc that governs which rules may or may not apply. Of course, the absence of any statutory database of employee numbers does not help either.  

As an aside, I advise everyone to live and die by the number of employees the customer has at the time of contract (i.e. have the customer declare it on the sales paperwork), which is an approach not formally endorsed by Ofcom, but nor is it one they have objected to having been made aware of it in my experience either. 

For a small business, the definition is “one at which not more than 10 individuals work (whether as employees, volunteers or otherwise)”. So, that means counting your child if you bring them in for a day to help you with your filing, or for your local pub it includes all those part-time students you might see behind the bar.

Thankfully though, the new GCs bring in a new separate definition for not-for-profit. These are now measured as a business, but without counting volunteers. Ofcom have taken on board the long standing criticisms of using the small business definition in the context of not-for-profit, such as the example of a hypothetical dog-shelter with 10 volunteers which may lose some of its statutory protection if someone brings a friend to help for a day. 

But anyway, I digress – back to raggedy contracts. Where this new rule becomes a problem for providers of business communications services is the addition of extra seats or licences, or capacity during a minimum term. For example, let’s say Joe Bloggs has 7 seats of hosted PBX on a 3-year term and then hires two more employees 6 months in. If you sign those additional seats on 3-year terms, you have created a ragged end contract and may come unstuck with GC C1.8 down the road. 

The solution is one of two. Ofcom has recognised that this rule can interfere with good things in the provision of services to businesses. So, if you and your customer don’t want to have different terms for each new seat (and possibly a different price based on the fewer months to amortise the cost of the handset over), you can still have ragged end contracts. You’re just going to have to “hang a lantern” on it.

Everyone is going to have to consider the guidance (A10.25-39 of this link) against their own products, services and circumstances, but broadly, if:

1.     The customer is aware of the issue and was offered an alternative; and
2.     Other efficiencies accrue to the customer

then it is unlikely to be considered a foul by our sectorial referee.

Other efficiencies are things like only having one line on an invoice and each seat being the same price, the benefit to the customers working capital of not having to amortise handsets over short periods to align end dates etc. 

As with the next major change we are going to discuss, this should just be about getting the paperwork correct up front in the sales process. 

Contract Duration

Remember that rule in the GCs that a consumer cannot have a contract more than two-years? Well, it is coming to small businesses (and not-for-profits) too.

From 17th December 2021, a contract entered into with a small business (remember to count their volunteers) or a not-for-profit (remember not to count their volunteers) for a number-based interpersonal communications service (something that involves phone numbers) or an internet access service (means what it says) that customer must expressly waive their right to a minimum term not exceeding 2-years. 

Again, this is about getting the paperwork right. Next summer, you’ll certainly put this into the contract information and summary you will all be preparing for each sale by order of Ofcom, but for now, you just need to insert a line in your terms to address this.

Also, don’t forget that the age-old rule of any customer (consumer, small business or enterprise) having a right to a minimum term not exceeding 12 months on request survives these changes. 

Ofcom have stated it does not affect your advertising, so no need to suddenly reprint everything with 2-year term pricing. 

Usage Notifications

No doubt everyone reading this is already well versed with Section 124S of the Communications Act 2003 and GC C3.7 on usage information and control? 

New GC C3.13 comes into effect on 17th December 2021 too and affects the same small business and not-for-profit customers using the same number-based interpersonal communications services and internet access services we described above.

When they fully use their inclusive allowances of something, they need to be notified and told what their ongoing usage charges are when they continue to upload selfies to social media afterwards. Or make calls. Or send messages etc. It’s that simple (on paper at least), and just like the two-year term, the right to receive these notifications can be waived. 

Stocking Fillers

  • Handset locking in mobile services will be prohibited expressly; however, be careful of any restrictions on your PBX handsets if they are your customer’s property at the end of a contract, such as admin rights etc. That may fall foul of the ‘disincentive to switch’ if care isn’t taken
  • End of contract notification and annual best tariff advice scope is increased to include bundles.
  • The information you need to have on your website is extended and now has to be machine readable to assist the disabled
  • You must provide information in an ‘open data’ format to any qualifying comparison website that asks you, free of charge

If you’d like some more detail, Comms Council UK has some resources and Ofcom published a not-too-incomprehensible slide deck. Also, feel free to reach out to me, just not on the day they come into effect, because I plan to be down the pub rueing my old age. 

Merry Christmas.

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