On ISPreview.co.uk we’ve long made a point of highlighting post-contract / discount prices in our listings and we’ve frequently called for ISPs to make such details clearer. Today Citizens Advice has similarly warned that broadband prices can rise by an average 43% when fixed term deals end.
Crucially the CA notes that more than a third (35%) of broadband customers don’t realise they could face price hikes by staying on the same contract with their provider after their initial deal ends, which isn’t such a big surprise because a number of ISPs have a long history of hiding post-contract prices in the small print.
As a result the CA states that people on the cheapest broadband deals are hit with an average price rise of £113 a year once their deal ends, which the group says amounts to charging customers a “loyalty penalty” for remaining on the same deal. By comparison ISPs like Sky Broadband, as well as many smaller providers, have been a lot clearer and display their post-contract prices on the main product pages BEFORE you begin the sign-up process.
CA Examples of How UK ISP Prices Change
ISP (cheapest basic broadband deal) |
Monthly tariff during fixed contract period |
Monthly tariff after fixed contract period |
% increase |
Monthly difference |
The annual loyalty penalty |
The loyalty penalty over 4 years |
BT – 12 month |
£24.49 |
£40.99 |
67% |
£16.50 |
£198.00 |
£594 |
Virgin Media – 12 month |
£32.25 |
£32.25 |
0% |
£0.00 |
£0.00 |
£0.00 |
TalkTalk – 24 month |
£20.00 |
£25.50 |
28% |
£5.50 |
£66.00 |
£132 |
Sky Broadband – 12 month |
£18.99 |
£28.99 |
53% |
£10.00 |
£120.00 |
£360 |
EE – 18 month |
£21.00 |
£28.50 |
36% |
£7.50 |
£90.00 |
£225 |
Take note that special offer prices change all the time (often weekly) and as such the examples provided above by the CA may have already changed again for some of the providers. On top that it’s worth noting that the CA has overlooked how other aspects of service cost, such as discounts on setup fees or cashback / reward cards, can also have an impact.
In our view there’s nothing wrong with promotional special offers (all sorts of sectors do similar discounts), so long as consumers are fully informed about any post-contract / fixed term offer prices, which should be clearly displayed alongside the package being offered (before the sign-up process has begun).
The CA appear to agree with our stance and are also calling for “providers to include up-front information in advertising and when people take out the contract – instead of details only in the terms and conditions – and texts when the fixed price comes to an end.”
Gillian Guy, CEO of Citizens Advice, said:
“Loyal broadband customers are being stung by big price rises once their fixed deal ends.
People often choose their broadband deals based on the price that works for them – but our evidence shows that many do not realise the price will rise after the end of the fixed deal. With people staying with their supplier for an average of 4 years, these extra costs can run into hundreds of pounds.
Older customers and those who have less money are more likely to stay with their supplier for longer meaning their loyalty penalty could reach over a thousand pounds.
The government has rightly put energy firms on warning for how they treat loyal customers – the actions of broadband firms warrant similar scrutiny. Extra protections for vulnerable consumers are also a must.”
The CA wants to see extra protection for vulnerable consumers. A survey of over 3,000 consumers found that broadband customers aged 65+ are more than twice as likely than customers under 65 to have been in the same contract for more than 10 years. Similarly people on a low income (defined by the CA as earning between £7,001 and £21,000) are almost 3 times as likely as high earners to be in their contracts for 10 years+.
The CA suggests that one solution to help vulnerable consumers could be for Ofcom to “look at how a price cap, similar to the pre-payment meter cap in the energy market” might work for broadband customers, which is an idea that won’t go down too well with broadband ISPs.
Data usage seems to double year-on-year and so broadband prices have to rise in order to keep pace with demand and upgrade networks (harder to do with a price cap). We should also remember that end-user energy and water consumption is both less complex and less variable than broadband, although admittedly the supply costs are subject to the winds of global change (e.g. unstable wholesale gas and oil prices).
We had hoped that last year’s review of broadband pricing by the Advertising Standards Authority (here), which resulted in a series of new measures to improve how related packages and prices are promoted, would have tackled this aspect too. Unfortunately at the time ISPreview.co.uk was told by the ASA that “post-contract pricing is not covered by our new approach which only covers compulsory charges and prices.”
In fairness the vast majority of ISPs today are fairly honest with their pricing but there’s definitely still room for improvement. A rule to prevent post-offer or post-contract prices being hidden in the small print would also benefit providers by ensuring that everybody can by fairly compared, rather than some ISPs appearing to be cheaper than they actually are (i.e. over the longer term).
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