Back in June 2007, OfcomWatch reported:

‘So what should Ofcom do about this [inflated broadband speed claims]? Is this a rip-off comparable to the phone-quiz scandal — something Ofcom need to get out in front of before they are eventually savaged by the press for failing to protect consumers? I personally think so.’

Well, today the press came out swinging in light of a Which? report that basically states the obvious: We are all being misled by broadband companies. In legal parlance — it’s called fraud.

The BBC reports:

‘Ofcom told the BBC News website that it was monitoring the situation.

“If we get increasing complaints we may look at what more can be done. We are working closely with the ASA and it is very important that consumers know what they are getting and what they are paying for,” said an Ofcom spokeswoman.’

This is an important regulatory failure that deserves immediate attention at the highest levels of Ofcom. Even at this late date Ofcom’s casual ‘we may look at what more can be done‘ response indicates a distinct lack of concern. It’s otherwise great that Ofcom is taking action — structural reforms — to bring more competition into the marketplace for telecommunications services. But a well-functioning market relies on accurate information and the lowest possible transaction costs. Unfortunately, this is where Ofcom is failing. The regulator — like all of us — surely knew that these broadband speed claims were demonstrably false and did very little to protect consumers.

I’ve been talking with some legal experts concerning this matter. One problem in the UK is that the rules for legal services (% billing by attorneys for successful claims is not permitted) discourage class-action type remedies. So, without effective private remedies, consumers are forced to rely on Ofcom and similar regulators.

Let’s hope Ofcom finds religion here and takes a more forceful stance.