We’ve amended our cancellation charging policy related to bitstream products to make it easier for you to implement. We wanted to encourage you to reduce overall cancellation rates whilst giving you more flexibility to focus on reducing those cancellation types which are a particular issue for your business.

What’s happening?

You recently gave us feedback on our plans to reduce cancellations and, in particular, our plan to implement cancellation charges based on our draft cancellation charging policy. 

You told us you were concerned about being able to pass on any cancellation charges to consumers and that you didn’t have enough time to get ready for go-live of our new cancellation policy. Some concerns were also raised as to the reliability of cancellation reason classification, which could cause complexities with on-charging and disputes. Many of you also thought there were real opportunities to reduce overall cancellation rates through other initiatives – but you differed on the initiatives which made sense for your business.

Our intention in introducing the cancellation charges policy is to drive a reduction in cancellation rates across the industry. We believe it’s better to focus on the gains to be made in end-customer interactions across all players in the industry, rather than trying to identify where end-customers potentially are responsible for cancellations. We thought about your feedback and were concerned the on charging focus created uncertainty as to whether the policy would drive the kind of reduction we were looking for without creating new, unproductive challenges. 

Taking on board your feedback, we’re amending the cancellation charging policy to:

• shift the focus from reducing chargeable cancellation types to reducing overall cancellation rates; and
• give service providers more flexibility to focus on reducing those cancellation types which are a particular issue for their business. 

We are hopeful our amendments will remove some of your on charging concerns and re-set the policy to better achieve its objective, i.e. overall cancellation rate reduction across the industry.

What’s the detail?

You can check out the amended cancellation charging policy here and a more detailed explanation of the methodology we’ll use to calculate cancellation charges and how we’ll report to you on these cancellation charges. We’ve summarised the changes we’ve made below: 

• Scope

The change only initially applies to bitstream products and services.  We will periodically review whether to extend the policy to other products in the future.

• Going back to basics in terms of which cancellation types we charge for

We’d originally tried to exclude charging for certain cancellation types depending on who was ‘responsible’ for the cancellation. Instead, based on your feedback, we’ll charge for a portion of all of the qualifying cancellation types identified in the Operations Manual of the Reference Offer (i.e. amongst other things where Chorus has incurred a charge from a service company including for a technician visit), unless the charging relief threshold is met (see further details about the charging relief threshold below).

• Introducing a target cancellation rate threshold of 21% from 1 March 2020, which reduces over time to 15% from 1 September 2020

We’ll measure this on a monthly basis and by reference to a service providers overall cancellation rate.  In calculating a service provider’s overall cancellation rate we will take into account all cancellation types, not just cancellation types we will charge for. If a service provider’s monthly cancellation rate:

• meets or is below this threshold, there will be no cancellation charges for the month; or
• is above this threshold, there will be cancellation charges for the month, calculated by reference to the extent to which the service provider missed the target threshold.

This charging relief threshold is designed to encourage service providers to focus on tackling overall cancellation rate reductions rather than on charging to consumers (which we acknowledge had its challenges under the original policy).

We’ve adopted a reducing threshold rate over time in recognition of the time required to implement initiatives of this nature and a possible lag between initiative implementation and measureable cancellation rate impact.

In calculating the 15% target for cancellations, we have benchmarked this against the current approximate copper cancellation rate, as we understand there will always be some unavoidable cancellations.

We believe the amended policy adopts a fair approach to cancellation charging – we’ve not sought to recover all of the charges we are contractually entitled to in recognition of the fact service providers are not able to influence every type of cancellation for which we are allowed to charge.

We know the amended policy means we may charge for some cancellation types that service providers believe are not within their control. For example, in earlier feedback service providers identified concerns about the treatment of orders cancelled due to a consumer being unhappy with their internal or external scoping options. In reality, these types of cancellation made up only 2.5% of total fibre order cancellations during October 2019 – and were at a similar level for the preceding months.

In turn, the introduction of a threshold approach means we won’t charge the full amount as identified in the Operations Manual of the Reference Offer. Instead we’ll only look to charge to the extent you are above the threshold, charging only a portion of what we are entitled to charge. The threshold has been set at a level we believe takes into account any cancellation types service providers believe are beyond their control.

We’ve tried to strike an acceptable balance in rethinking this policy to ensure it adequately encourages behaviour to reduce overall cancellation rates while also being reasonable in its application.

Next steps

1. Further feedback from you

Formal consultation on the policy closed in late October. Our amendments to the policy in response to your feedback from that consultation are significant. As a result, we’d like your further feedback by 2 December 2019 on the threshold approach under the amended policy. We’re specifically interested in your thoughts on the glide-path construct, timing of threshold reductions and the choice of the copper network cancellation rate as a proxy benchmark. Please contact your Account Lead or Service Delivery Manager with further feedback at first instance.

2. Cancellation reporting from 1 November 2019

We’ll give you cancellation reporting on a monthly basis from 1 November 2019 to indicate the level of charging you would incur under our amended cancellation charging policy. The first report will be available by 15 December 2019 for the month of November 2019.  This will help to give you some insight into how the policy will be applied in practice from 1 March 2020.

3. Cancellation improvement plans

We’re working to finalise cancellation improvement plans with service providers by 15 November 2019. We’ll have a few months before 1 March 2020 over which to measure the impact of our joint initiatives on cancellations, with a view of achieving reductions and potentially meeting the initial threshold rate.

Contact

For any queries please contact your Account Lead or Service Delivery Manager at first instance.

Please note that you can find all information about fibre cancellations on our dedicated webpage.