UK economy loses £17.6bn due to fixed connectivity outages

London-based provider of direct internet connectivity for business Vorboss has calculated that the UK economy suffered a loss of £17.6bn in economic output over the past 12 months due to connectivity outages.

After its investigation into productivity, Vorboss called on UK communications regulator Ofcom to introduce an automatic compensation regime for business customers when connectivity access is down.

The study found that more than half (51%) of businesses with a fixed business internet contract reported that they experienced at least one loss of service in the past year, a figure that rises to 60% for London’s businesses. Almost a fifth (19%) of businesses reported experiencing three or more outages in the past year, with 28% in London being hit three or more times. The potential loss for London was £5.7 bn, representing just over 1% of the capital city’s GDP.

Vorboss stressed that 61% of businesses that experienced an outage did not receive any compensation. Out of those that didn’t ask for it, the two most cited reasons were that requesting compensation was not worth the time and effort (44%) and they didn’t expect to get compensation (34%).

Ofcom introduced automatic compensation for consumers in 2019, and found the scheme increased compensation payments and saw more steps taken to fix issues. Vorboss believes now is the time to introduce a comparable scheme to protect UK businesses.

In a letter sent to Ofcom chief executive Melanie Dawes, Vorboss suggested that if connectivity providers were incentivised to improve the reliability of their services, the productivity benefits could be “dramatic”.

It asked Ofcom to review the provision of compensation in the fixed line business connectivity market and consider whether an automatic compensation scheme is an appropriate remedy. The company believes that it would provide reassurance for businesses that compensation claims are real and will be delivered automatically.

“Given the success of the voluntary compensation scheme introduced in the fixed line consumer market, we would welcome the opportunity to be a founding member of a similar scheme for business services,” said Vorboss chief corporate affairs officer James Fredrickson.

“Our research shows that incentivising networks to continually improve the resilience of their infrastructure will have dramatic productivity benefits for UK businesses and the economy as a whole. We believe that an automatic compensation scheme across our market is an effective means to do this.”

Vorboss CEO Tim Creswick added: “As the data in this report shows, the productivity uplift that would come from improved network quality is massive. We should all be incentivised to compete on quality – that would force an uplift in network performance and drive a much-needed economic boost.

“Ofcom’s introduction of automatic compensation in the consumer market has been a success, pushing service providers to improve quality, while giving customers reassurance that compensation is real and tangible. If the scheme was extended to include businesses, we would see the same benefits, along with a significant productivity boost to London and the UK economy through reduced outages.”

Going forward, Vorboss said it would implement automated compensation for all new and existing customers served by its network, across both retail and wholesale channels. If Vorboss business internet goes down for more than four minutes, customers will automatically be compensated with at least one day’s worth of service credits. If it is down for more than 24 hours, customers will receive the full pay-out of two months’ worth of service credits.