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Ofcom learns lessons from Biscit fallout

New migration rules get first dunk

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Analysis Ofcom's new broadband migration rules have been given their first run out in the last week with the collapse and carve up of failed ISP Biscit Internet.

Well-placed industry sources tell the Reg that, compared to previous collapses, stranded Biscit punters were better serviced by the industry. In future collapses, they may not be cut off at all, the sources said.

Ofcom overhauled the system governing consumers' rights to their Migration Authorisation Code (MAC) last month. The new scheme replaced a voluntary code of conduct which had repeatedly failed to protect customers when broadband firms went bust or provided dodgy service.

Two ISPs - Madasafish and SupaNet - have already pumped out press releases lauding the new rules for bringing them subscribers happily brandishing their newly liberated switching codes. Unlike the similar schemes in banking and utilities however, the regulations were not primarily instigated by the difficulty in switching to the best deals: although that frustration was present, competition in the market is fierce, as Biscit discovered. The move was more driven by a series of damaging failures of the system which blighted the industry's reputation last year.

The problem was highlighted several times by collapses and legal spats involving Manchester-based broadband wholesaler Netservices. When it ran into a dispute with Biscit (which was later resolved in Biscit's favour in the High Court), punters were cut off with Biscit claiming it was unable to provide MACs, and Netservices arguing it would be in breach of contract if it ponied up.

The new rules came into force on 14 February backed by the threat of fines, and put the onus on the wholesaler to step in if a retailer is in trouble. Accordingly, Netservices updated its MAC policy and has begun to pull back from the retail broadband market, saying it's now too expensive to administer.

Netservices spokeswoman Maria Goggin told ispreview.co.uk: "We did indeed advise [about 20] smaller resellers of domestic wholesale broadband that we wished to cease to supply as we do not and cannot see how we will make a profit with them in the future."

For BT, which sits on top of the ADSL wholesale structure, no such cut and run option exists. When Biscit went under, Ofcom and BT hastily arranged a freephone helpline to dish out MACs. Ofcom spokesman Simon Bates said: "Was it perfect? No. It's been a valuable learning experience."

He added that the number of complaints the regulator has received about Biscit's collapse was a sign that the rules had empowered subscribers. "We've had as many complaints, if not more, but that's because of the new rules rather than in spite of them. People are more aware there's regulations, which made them more likely to come to us."

Bates told us Ofcom expects the rules to get an acid test when it launches its first investigation based on the new regime. It is currently examining complaints about the handling of the Biscit collapse for evidence of consumer harm, which would be required to kick off the process.

Broadband trade association ISPA said its members were seeing a swift influx of escapees from Biscit, who had a better understanding of their MAC rights than in the past. Spokesman Brian Ahearne said most confusion had been concentrated on the provider side around wholesaler relationships, but that Ofcom had been able to offer clarification.

The positive reports were further buoyed by industry insiders, who suggested that moves are afoot to go further than providing a helpline for marooned surfers next time an ISP goes "pop". A mooted plan would see wholesalers provide a few days leeway for those affected by a collapse or takeover to find a new supplier.

A BT spokeswoman declined to comment on any move to further protect broadband consumers, but said that BT Wholesale "will continue to work closely with Ofcom and retailers" in cases like Biscit. Which is nice, especially because it, and others, have little choice now. ®

Bootnote

Breathe, the ISP which picked up the remaining 1,500 Biscit customers in the administrators' sell-off, had said it would be in a position to hand out MACs to ex-Biscit subscribers on Thursday, and a spokesman confirmed to the Reg it had stuck by its promise and sent out two so far. EurISP, the wholesaler for this group, said it was not set up with the customer service logistics to distribute MACs in the immediate wake of the collapse.

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