CEO of Broadband ISP Zen Internet Calls for Ban of Mid-Contract Price Hikes

The boss of venerable UK broadband and phone provider Zen Internet, Richard Tang, has backed the Government’s Secretary of State for Science, Innovation and Technology (DSIT), Liz Kendall, in her alleged “call for an ‘outright ban on absurd’ mid-contract telecoms price rises“. But it remains unclear whether Ofcom will go that far.

The remarks came after the Government reacted angrily to O2’s recent decision to increase their annual mid-contract price rises beyond what customers agreed to when they signed-up (here). Ofcom said they were “disappointed” by the change, which went “against the spirit of our rules which are designed to ensure greater certainty and transparency for customers when they sign up” (here).

In response, Liz Kendall called on Ofcom’s CEO, Dame Melanie Dawes, to “look at in-contract price rises again“ and suggested that the regulator instead “consider the possibility of adopting a similar regime to those such as insurance, where new and existing customers need to be offered the same deal“.

Richard Tang, CEO of Zen Internet, said:

“I fully support Liz Kendall’s call for an ‘outright ban on absurd’ mid-contract telecoms price rises, and would urge Ofcom to seriously consider imposing such a ban. To do so would offer consumers the best protection and certainty over what they will pay.

It’s all very well saying that consumers have the ability to terminate their contracts early without penalty when they are caught by surprise by unexpected price hikes, but the telecoms companies know full well that only a proportion of people will take that action, particularly on the run up to Christmas.

At Zen Internet, we’ve never imposed mid-contract price hikes on our consumer customers. Following our “Happy customers” mantra, we believe consumers deserve the simplicity of having the same fixed price throughout the length of their contract. The approach works commercially – we’ve been doing it for 30 years and have grown every year. We also believe it’s unethical to impose massive price hikes when customers go out of contract – a practice adopted by most of our competitors.”

However, it is worth pointing out that Liz Kendall herself never specifically spoke the words “outright ban on absurd” mid-contract price rises, which instead seems to have been accidentally conflated with the entirely separate remarks of a commercial price comparison site via LBC (here).

Kendall did suggest that the regulator should “consider” whether providers could adopt a similar scheme to insurance companies, “where new and existing customers need to be offered the same deal“. But there are different ways of interpreting such a suggestion, including one that isn’t necessarily akin to an outright ban on mid-contract price rises – something we would also support as the simplest and clearest approach.

Zen naturally have a vested interest above in promoting their own virtues as part of this debate, but equally the more industry voices that speak in favour of such an approach, the better. At the end of the day, it remains to be seen what changes Ofcom will actually make, although we remain sceptical about the chances of them adopting an outright ban. History tends to suggest that they often favour compromise solutions.