Thursday, 26 February 2015

Knowing your customer

Obviously, as a business, we have to know our customer. To be more specific we have to know some particular details about our customer.

This is not always true - a shop selling a mars bar does not have to know anything of their customer, and neither does someone running a vending machine.

However, we have to know some details, though in theory we could provide some services where we do not need to.

For a start we have to know what that customer's legal entity is, e.g. a limited company, or a sole trader, or so on. We also have to know a service address. The reason for these, apart from anything else, is so that we are able to enforce the contract (to take someone to court if necessary) for things like non-payment of bills. This is the same for  pretty much any businesses offering any sort of ongoing service.

But we also have to know a few other things, and we do ask some of these when people order. Here are just a few examples of what and why...

Under 18

If someone is under 18 they are a minor, and there are a whole load of things that impact the contract we can make with a minor and the extent that we can enforce such a contract. We have actually made a decision for the services we offer not to deal with minors (sorry). We do ask though, as lying about that would be fraud. If we did not ask, it would be tough luck on us.

Consumer

The rules on contracts, in terms of what is allowed, and some of the steps we have take in giving notice of contract terms and getting agreement, are impacted by whether someone is a consumer or a business. Consumers have extra rights for cancelling contracts that have not yet been provided. There are also differences in terms of late payment penalties that can be applied. Of course it is possible for someone to be an individual, but buying as a sole trader in a business and so not be a consumer!

Small business (10 or fewer individuals work for the business, paid or volunteer)

This is a complicated one, as any small business can change to have greater or fewer staff over time. This one impacts a couple of things - one is the ability to make use of ADR (Alternative Dispute Resolution). Someone with more than 10 people doing work for them cannot use ADR.

This is also part of the new GC22 migration. Anyone with more that 10 people cannot expect to be able to migrate broadband or fixed line telephone services (though in practice they may be able to).

Communications provider

This is complicated!

For Digital Economy Act, being a Communications Provider means you are exempt from copyright notices. It is possible to be a Communications Provider and not be an Internet Service Provider, even, so avoiding other obligations of the Digital Economy Act. However, for this, the definition of Communications Provider comes from the Communications Act, and seems to me to cover anyone with a network switch or router at home would meet the definition.

For ADR, a Communications Provider cannot use ADR, and that definition is from the Communications Act too.

For GC22 migrations of broadband or fixed line, the definition is different! It is someone providing DSL (including FTTC) or fixed line telephone services, so someone with a switch at home is not a Communications Provider under that definition.

This makes "Knowing your customer" slightly more complex as someone could (a) be a Communications Provider under the Communications Act (and so for DEA and ADR) reasons, but could be (b) a Communications Provider under OFCOM GC22, quite independently (one, or the other or both). You then have that for DEA one has to be "buying service as a Communications Provider" so it is not simply whether you are one, but if you are buying as one!

At the moment we ask if someone is a Communications Provider under the Communications Act, but we may have to refine that question slightly!

10 comments:

  1. Ok, re: GC22 migrations, "providing fixed line telephone services".. does it state you HAVE to be a licensed comms provider or just 'providing fixed line telephone services'.

    I have a PABX, which to me would seem to be the landline equivalent of a network switch, and thus make me a 'provider of fixed line communications services', even if just to the rooms in our house...

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    1. No need to be "licenced", it is down to what you are - so maybe!

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    2. Hmmm, well I have an iPBX and an ATA through which I definitely "provide" fixed line telephone services to family and any visitors so if I can be a communications provider under the DEA definition then following similar logic I would also be one under GC22, ... maybe

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    3. Even if something said you needed to be "licenced", I seem to recall there being a "self provision licence" to cover such things in the past, which could probably be argued as sufficient...

      (Amusingly, I'm currently in the process of moving an unbundled line to a new provider in the knowledge the "service address" is in fact completely wrong: due to an omission in Royal Mail's Postcode Address File, Openreach auto-incorrected their records to put the line in another building entirely, and of course only the Openreach customer "owning" the line can submit corrections. An unexpected benefit of the PCP-only FTTC provision option: it avoids Openreach sending an engineer to the wrong company to install FTTC!)

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    4. *Even if something said you needed to be "licenced", I seem to recall there being a "self provision licence" to cover such things in the past, which could probably be argued as sufficient...*

      Licences for the provision of communications services were abolished in Europe in 2002, with the new regulatory framework.

      Some things — such as spectrum, number allocation — are still done on a licensed basis in the UK but, broadly speaking, most other stuff is under general authorisation (Ofcom's general conditions of entitlement) instead.

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  2. *This is not always true - a shop selling a mars bar does not have to know anything of their customer, and neither does someone running a vending machine.

    However, we have to know some details. ... The reason for these, apart from anything else, is so that we are able to enforce the contract (to take someone to court if necessary) for things like non-payment of bills*

    I should have thought that AAISP *chooses* to acquire and retain certain data which are not required necessarily to provide the service (e.g. not including service delivery location), and it chooses to acquire and retain these data to better its position, rather than it being the case that AAISP "has" to have them.

    If it so chose, AAISP could restructure (some?) of its services to be closer to that of a Mars bar retailer or a vending machine operator: cash up front, service terminates when no money is received. An Office::1 customer pays the full deposit for the leased Firebrick up front so that, even if they run off with it, there is no loss to AAISP: it already has the deposited sum safely in its bank account. Capacity cuts off once the fixed amount is used up and so on.

    Provided that it has its money, the contractual risk to AAISP is probably rather low?

    If AAISP wished, it might be able to offer some services with a reduced data intake (perhaps not anonymous, in the case of services which need a supply address, but pretty close to it), and perhaps charge a higher monthly cost to cover off perceived risk?


    *are impacted by whether someone is a consumer or a business.*

    Just in case you have not come across it before, in some cases, it is not whether the customer "is" a consumer or a business", but whether the customer "deals as a consumer" — and a business "deals as a consumer" where it does not make the contract in the course of a business and does not hold itself out as doing so! (see, for example, s12, Unfair Contract Terms Act 1977 (http://www.legislation.gov.uk/ukpga/1977/50/section/12).)

    Take, for example, R&B Customs Brokers Co. Ltd. v. United Dominions Trust Ltd. [1987] EWCA Civ 3 (http://www.bailii.org/ew/cases/EWCA/Civ/1987/3.html): the car was bought by a business, but, it was held, not in the course of a business, and so the purchasing company was entitled to be protected as a consumer.

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    1. OK, yes, and we have been trying to work out if and how we could offer services which involve us knowing a lot less - partly to pursue privacy angles on this - can we make a "pay as you go" service in some cases perhaps?

      The point on "deals as a consumer" is rather interesting though, thanks. Means we may have to ask if someone is doing that too to know where we stand!

      Thanks for commenting Neil.

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    2. I'd have thought the problem with this is going to be fixed term contracts - like FTTC. Unless you'd propose you pay the line rental & FTTC line cost (without usage) up front for the minimum term?

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    3. I expect with a prepaid service like that, you'd *want* to pay for a block of time, like a year, in one anyway.

      Indeed, I'm in the process of buying a year's FTTC that way this month (paying the year up front to get a discount), and without either Openreach or the ISP having a (correct) service address for the line (although in this case, it's a BT error I'm planning to correct when I can, rather than an effort at pseudonymity).

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  3. I may be missing something but why are businesses with 10 or more employees not able to to migrate services. I assume they would still be able to cancel, and then start services with another provider, or if the connection was mission critical, order new lines at the same premises, start service with new provider, then cancel service with old provider when the new install is confirmed working.

    What is the reasoning behind this?

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