SMEs will soon be able to ditch broadband contracts that restrict them to lower speeds

SMEs will soon be able to ditch broadband contracts that restrict them to lower speeds

SMEs will soon be able to ditch broadband contracts that restrict them to lower speeds

Small and medium-sized businesses (SMBs) will soon be able to exit contracts with providers offering substandard broadband speeds as part of new measures recently announced by industry regulator Ofcom.

Seven business internet service providers (ISPs) have signed up to Ofcom's code of practice, which is designed to bring more clarity around broadband products.

Under the terms of the new measures, SMEs will now have the right to walk away from contracts without incurring a penalty if their connection speeds fall below a minimum guaranteed level.

The move is similar to measures already in place for consumers.

The seven ISPs already on board with the new proposals are estimated to serve around two-thirds of SMEs across the UK, offering broadband contracts with asymmetric digital subscriber lines (ADSL), fibre-to-the-cabinet or premises (FTTC and FTTP), cable, wireless and satellite.

Ofcom claims it has grown increasingly concerned about a perceived speed gap developing among SMEs, stating there had been confusion as to what service customers thought  they were getting, and the end product being delivered.

It added that many of the issues came on the back of a disparity between actual speeds and headline speeds being advertised.

Despite not going as far as naming particular offenders, Ofcom remains adamant that some providers are failing to offer businesses a personalised speed estimate during the sales process.

Ofcom chief executive Sharon White said: “Where broadband companies fail to provide the speeds they promise, we’ve made it easier for businesses to walk away from their contracts without penalty.

"Providers have also agreed to give clear and reliable speeds information upfront so business customers can make more informed decisions,”

While the news is likely to benefit a large number of businesses across the UK, the right to exit a contract under the measures will not apply to those using dedicated connections, such as Ethernet first mile, Ethernet over fibre-to-the-cabinet (EoFTTC) or leased lines.

The same will apply to SMEs with FTTP or cable connections as, by their very nature, they contain variable speeds.