UPD First Utility Calls on Ofcom to Tackle Broadband Discounts and Notices

Energy provider First Utility, which recently entered the United Kingdom’s crowded internet and telecoms sector, has called on Ofcom to introduce new regulation that would force broadband ISPs to give customers plenty of warning when their initial service discounts and contracts are coming to an end.

In fairness many providers already give their customers some notice, although experiences do vary. On top of that some ISPs aren’t especially clear about their post-contract pricing when you sign-up and this can result in an unwelcome surprise further down the road.

We had hoped that the Advertising Standards Authority (ASA) might tackle that last point when they changed how adverts for broadband services were priced in October 2016 (here) but alas their mandate didn’t stretch far enough.

Ed Kamm, First Utility’s Commercial Boss, said (City A.M.):

“The parallels between the energy and telecoms markets are striking, with large swathes of households paying far too much for both services.”

By comparison UK energy providers are required to notify their customers some 49 days before the end of a fixed term contract and from that point onwards the customer should be able to switch provider without incurring any penalty (exit fees etc.). Mr Kamm believes that broadband ISPs are “lagging behind” by failing to adopt a similar degree of flexibility.

Ofcom are already known to be looking at making some improvements in this area (here) and the regulator has promised to give us their thoughts sometime today. Meanwhile First Utility claims that the average difference between teaser rates and out of contract rates is £113 a year.

As a result the provider believes that 72% of all homes with broadband are paying more than they need and only 10% of broadband bill payers could recall having been alerted to their new rates.

UPDATE 3:58pm

Ofcom has now provided us with a comment.

An Ofcom Spokesperson told ISPreview.co.uk:

“Consumers should have access to all the information they need to be able to choose the deal that works best for them. We’re already working on plans to make it easier for people to take full advantage of the best deals on offer, including looking at whether providers should prompt customers that their contract is coming to an end.”