Ofcom work with broadband companies for fair deals

30 September 2019   By Dr Lucy Brown, Editor

Out of contract broadband customers will pay less after the end of their introductory offer as part of new measures.

BT, Sky, TalkTalk, EE, Virgin Media and Plusnet have all made commitments to alter the way they deal with out of contract charges by March 2020.

Ofcom's review into broadband pricing has found that vulnerable people lack the confidence and skills to negotiate, so they're considering new legislation.

They also found that discounted prices for superfast broadband were cheaper than some out of contract standard broadband prices for the first time.

ofcom logo
Source: Ofcom

What have companies promised?

In a similar move to the promises extracted from mobile networks in July regarding out of contract customers, broadband companies have moved to act on Ofcom's immediate recommendations.

These are their promises, split down by provider:

  • BT will allow out of contract customers to get same deals as new customers when they take out a new deal. They will also cap difference in-contract customers pay when contracts expire, provide a one-off reduction for vulnerable customers who are out of contract on expensive deals, and protect out of contract customers from inflation rises above inflation. Finally, they will ensure customers without access to superfast services pay no more than entry-level superfast customers.
  • Sky will allow out of contract customers to get the same deals as new customers when they take out a new deal. They also say newly contracted customers will pay no more than £5 difference when their contracts expire.
  • TalkTalk will allow out of contract customers access to the same deals as new customers when they opt for a new contract. They will also carry out annual price reviews for most vulnerable customers.
  • Virgin Media will undertake annual price reviews for their most vulnerable customers to ensure they're on the best deals for them.
  • EE will protect customers who are out of contract from above-inflation price rises.
  • Plusnet will protect customers who are out of contract from price rises above inflation.

Details on some of these are still hazy, so Ofcom will expect more detail before they come into force no later than March 2020.

Customers losing out

Ofcom's review of the broadband market examined the prices paid by over 20 million broadband customers in the UK.

They found that out of contract customers pay up £8 to £9 more per month than those who sign a new contract with their existing provider.

In addition, a third of customers who negotiated with their existing provider ended up paying less than those on introductory deals.

They're keen to encourage customers to act once they're out of contract, whether that's to renegotiate with their existing supplier or switch to a new one.

However, they found vulnerable customers might be paying more than they should because they lack the skills to negotiate or navigate the market effectively enough to switch.

They've issued a proposed guide to help broadband companies treat vulnerable customers and are exploring the possibilities of a special tariff to protect low-income households. This would be underpinned by legislation.

Fairness key to future

Ofcom's review raised several issues, not least the unfairness of customers in areas that can't access superfast broadband sometimes paying more for copper services.

This links back to the idea of fairness that Ofcom has been talking about for some time now, and they signed all major broadband, phone and pay TV up to a set of Fairness for Customers commitments back in June.

They also introduced new rules for broadband, phone and pay TV customers to ensure customers will be alerted when their contracts come to an end, allowing them to negotiate or switch to a better deal.

This rule change won't be fully implemented until February 2020, the month before all the latest commitments from broadband companies are expected to be implemented.

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