Telcoms regulator Ofcom is coming under pressure to take action following complaints from small businesses over the quality of their broadband services.
Firms have complained that they are paying for advertised speeds they do not receive, in what they claim amounts to mis-selling from internet service providers.
A Downing Street petition has received more than 10,000 signatures from small businesses and consumers demanding ISPs advertise a typical rate for broadband subscriptions, not just a theoretical maximum rate.
Christopher Meacher, systems controller and IT manager at Fold Hill Foods, said his broadband provider is at best providing 12.5% of its advertised speed.
Kenneth Spencer, who provides IT support to small and medium-sized businesses, said his company pays £21.99 a month for an "up to 8mbps" service, but it receives only 512kbps.
Ian Fogg, research director at Jupiter Research, said, "It is in the interest of the economy to have clearer advertising on broadband, to have comparability of ISPs across the industry, and to encourage competition. At the moment there is no transparency between broadband packages and prices, which makes it difficult for small businesses to choose a provider."
Ofcom's Consumer Panel, which provides independent advice to the telecoms regulator, has recommended introducing a code of practice for ISPs selling broadband to businesses to address these concerns.
The code should require ISPs to explain the issues which could limit speeds and allow user companies a longer cooling off period after signing a contract to determine the adequacy of speeds. Where the actual speed is significantly lower than what businesses pay for, subscribers should be able to end their contract without penalty.
However, Fogg said this was not enough. "A longer cooling off period might help small businesses within the first week or two of subscribing to a service to determine its adequacy. But if an ISP does not have an incentive to invest in its network to support a rise in users, the speed could degrade, and a cooling off period won't help customers with 12- to 18-month contracts," he said.
Any code that Ofcom introduces should require ISPs to make minimum investments in their broadband networks as the number of its users rise, Fogg said.
But the real solution lies in changing the model ISPs use to charge for broadband, said Antony Walker, chief executive of the Broadband Stakeholder Group. He told a seminar in November that broadband pricing based on speed rather than use was a hindrance rather than a help. It has led to the false expectation that there would always be equal bandwidth available to all users, regardless of how heavily a network is used.
The answer is to charge businesses based on the bandwidth they actually use. This may kick-start the process of ensuring higher speeds for businesses and ensure that ISPs can increase network capacity as demand rises.
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