Exposing Hidden and Confusing UK Broadband ISP Charges - ISPreview
Exposing Hidden and Confusing Broadband ISP Charges
By: Mark Jackson - February 15th, 2010 : Page 3 -of- 3
"It is a LEGAL REQUIREMENT that any service or product aimed at the general public must INCLUDE VAT in its price"

Extra Data Usage Allowance Charges
Those who subscribe to a fixed-usage (capped) allowance package or exceed a particular level stated in your ISPs Fair Usage Policy (FUP) could easily be subjected to an excessive usage charge. Most ISPs will charge around £1 - £1.50 per extra GigaByte (GB) of data consumed above your stated allowance in any given month, though we have seen a few fixed line providers charging ridiculous prices like £5 for the same amount.

This is also a particular problem with most Mobile Broadband operators, where extra data charges can be astronomical. Make sure to check this before you join. Be aware that such charges are often very difficult to find, unclear and they may not be stated in the T&C’s. Good providers will offer facilities that allow you to keep track of how much data is downloaded on any given day, week or month.

Value Added Tax (VAT – Currently 20%) Confusion on Consumer Products
It is a LEGAL REQUIREMENT that any service or product aimed at the “general public” (i.e. residential consumers) must INCLUDE VAT (inc. VAT) in its price. There is a caveat here for ISPs; any product aimed at “consumers and businesses” can show a price excluding VAT (+vat), though most residentially targeted broadband packages are clearly touted as being for HOME use only and thus Inc. VAT prices should be shown.

Sadly there is a culture among ISPs, specifically certain smaller providers, of seeking to make residential packages look cheaper by not displaying Inc. VAT prices. In most instances it will be stated at the bottom that VAT has been excluded, though we have seen examples where this does not happen. In some cases the ISP will even throw out a mix of options, some including VAT and others excluding it. Suffice to say that this is against the law, unless the package is also being specifically touted for business users too.

Late Payment Fee
Every once in awhile your bank account, address or credit/debit card details might change and it’s possible that this small administrative oversight on your part could result in an ISP’s monthly charge being rejected because of a failure to keep the information up-to-date. Most providers will simply disconnect you until payment is received, though others allow a period of grace.

However some ISPs will also levy a late payment fee (e.g. BT charges £7.50), which you’ve probably never even seen mentioned before. Ofcom guidelines stipulate that such fees should reflect only direct costs, such as the identifiable extra cost of collecting the money.

Automatically Renewing Contracts
It’s not uncommon for ISPs offering long contracts to impose a process of automatic contract renewal. Ofcom believes that such systems are likely to be unfair if they do not give consumers something of benefit in return for the renewal and a fair chance to opt-out. Still, even though an ISP is supposed to email and or send a letter prior to contract renewal, it’s a good idea to keep a calendar note of the renewal date in case you wish to change provider before it happens.

BT Based vs Unbundled (LLU) Broadband Line Charges
The price you see is not always the price you pay, for example some of AOL UK’s broadband packages may charge around £15 per month but this will only be in areas covered by its cheaper unbundled exchanges. By contrast those in BT-only areas could be forced to pay £5-£10 extra per month. This is because BT is required to make a telephone line service available to everybody, thus their network is more expensive for ISPs; by comparison LLU lines just concentrate on the profitable areas, which makes them cheaper.

Line Ceasing and Reactivation Charges
Sometimes the only way to escape a broadband provider, such as one that has put you on to a fully unbundled line, is to either cease and have the telephone line re-provided or switch directly back to BT for awhile before selecting a new ISP. This is a hassle that can leave you without a broadband service for up to two weeks and in extreme cases it could even cost you £125 to re-activate the line on to a new provider (situations vary). Charges like this are not usually the existing ISPs responsibility (this is a phone line operator issue) and so it’s unlikely to be mentioned, even in the small print.

Conclusions

Last year Ofcom opened an enforcement programme to officially investigate compliance with the Unfair Terms in Consumer Contract Regulations 1999 act in relation to additional charges. Ofcom claims it will take enforcement action as appropriate where ISPs are found failing to comply with the Regulations. However the regulators guidelines are rather thin and most additional charges would simply not draw their attention.

Not all charges are excessive or wrong, indeed some administrative costs are necessary but they should be fair and only reflect direct costs (i.e. not be profit making). However anybody concerned with what they might be charged for a particular issue should query it with their respective ISP via email or telephone first. In addition some ISPs (e.g. Karoo) do make charges fairly obvious on the package details page. A large part of the responsibility is on end-users to make sure you read the terms.

Further advice on making official and unofficial ISP complaints:
http://www.ispreview.co.uk/new/complain/complain.shtml
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