Home
 » ISP News » 
Sponsored

Citizens Advice Criticises UK Broadband ISPs for Post Contract Price Rises

Tuesday, April 11th, 2017 (8:32 am) - Score 947

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).

Leave a Comment
8 Responses
  1. Avatar tonyp says:

    I’m tired of the repeated calls to switch, switch, switch for the best price. Encouraged by regulators and HMG, it seems that no-one cares about customer loyalty any more. In effect, loyal customers are paying to subsidise entry level discounts. NOT FAIR! I admit I’m in the 65+ group and I simply do not to want to run around comparing the best prices (which may not be the actual best price if weighted comparison sites are used), I have neither the time nor patience to switch, especially since I won’t get a better service so long as Openreach continue to provide a piece of wet string to my neighbourhood.

    1. Avatar JRHOP says:

      Totally agree with you, having to switch all the time is a huge pain and usually involves an issue or delay, rarely do they go smoothly. Whether this is just life or they do it on purpose to deter switchers we will never know. They also seem to be hiking up the activation price now to try and deter switching, £59.99 for activation is a joke.

    2. Avatar Kekkle says:

      Is this really that much of a problem, it’s something that happens every 12 or 18 months, it’s hardly “having to change all the time”.

      This is the only way that the UK market can work when the vast vast majority of people choose with their wallet primarily.

      No one is forced to change, you sign up for a contracted period at the end of which you can stay/leave/bargain. Just like with your mortgage agreement, or car insurance, or home insurance, or phone contract,etc.

      All that being said, I do agree that for vulnerable groups it should be crystal clear during signup what will/could happen at the end of the contracted period or if there are better options available, these options made clear to them.

  2. Avatar Billy says:

    Customer loyalty is now just another exploitable resource, it stopped being a ‘good’ thing towards the end of the last century. It is not just ISPs that are of this opinion, it’s banks, utility companies and just about anyone who requires paying.
    Even supermarkets with their ‘loyalty’ cards are primarily concerned with finding more ways to extract more cash from their customers rather than rewarding loyalty.
    Customer loyalty and capitalism just don’t go well together.

    1. Avatar dragoneast says:

      Exactly, it’s nothing new. though you should have gone a century earlier with the timing. My mother went from shop to shop to get the “best price” in the 1950s, and I have no doubt she got the habit from my grandmother decades earlier. We’re just too darned lazy (and moany), and no amount of regulation will cure that.

  3. Avatar Chris says:

    The issue is worse for people who can’t easily change. I have a very limited choice in my exchange. If on BT equipment I get constant internet disconnects when the phone rings which is not acceptable. It is not an OpenReach issue, it is with the exchange itself but BT refuses to fix it. The only unbundled service is Sky and their service works OK but I am stuck with them and their price hikes 🙁

    C.

  4. Avatar Kits says:

    You will find it is only the big companies that do the increases at the end of contracts, mainly because they start the contract on a reduced fee. If you go to smaller ISP that charge the correct price there is no increase at end of your contract. I moved to Aquiss from VM years ago my monthly price only changed when I changed products. Started off on ADSL2+ moved to FTTC when it became available, when the 12 month contract ended for FTTC no changes while in contract and no shocks after.

    You get what you pay for in when dealing with ISPs if you want to have cheaper payments then you have the hassle of trying to keep costs down by renogotiating new contracts. This means you are never really out of contract something I never liked being stuck with, plus VM did increase prices in contract. This is something I have never had since leaving them phone was with BT kept getting increases so moved that to Aquiss and that not changed in 2 years again monthly rolling contract.

  5. Avatar Jim Gayes says:

    It’s not even the end of a contract price rises that are painful, the during contract ones are just as nasty in my opinion.

    I recently negotiated a new EE mobile phone contract over the phone with retentions. The lady then spield off some blurb at high speed at the end of the conversation. I picked up something about price increase and when she finished I questioned her what she had just said about a price increase.

    She came clean and said that the new price I had just negotiated for my new12 month contract was actually going to be subject to a 2.5% cost of living increase in just 3 weeks time. So the price we had just agreed upon wasn’t even going to last until my 1st months bill!

    At that point I got very cross and told the lady what I thought of her underhanded sales techniques and asked her why she hadn’t quoted me the price that I was actually going to be paying for 11 months of the contract. The response I received was that “well all providers do bit” I said to her that it may well be the case, but it doesn’t make it right does it?.

Comments are closed.

Comments RSS Feed

Javascript must be enabled to post (most browsers do this automatically)

Privacy Notice: Please note that news comments are anonymous, which means that we do NOT require you to enter any real personal details to post a message. By clicking to submit a post you agree to storing your comment content, display name, IP, email and / or website details in our database, for as long as the post remains live.

Only the submitted name and comment will be displayed in public, while the rest will be kept private (we will never share this outside of ISPreview, regardless of whether the data is real or fake). This comment system uses submitted IP, email and website address data to spot abuse and spammers. All data is transferred via an encrypted (https secure) session.

NOTE 1: Sometimes your comment might not appear immediately due to site cache (this is cleared every few hours) or it may be caught by automated moderation / anti-spam.

NOTE 2: Comments that break our rules, spam, troll or post via known fake IP/proxy servers may be blocked or removed.
Cheapest Superfast ISPs
  • Hyperoptic £22.00
    Avg. Speed 50Mbps, Unlimited
    Gift: None
  • Onestream £22.49 (*29.99)
    Avg. Speed 45Mbps, Unlimited
    Gift: None
  • xln telecom £22.74 (*47.94)
    Avg. Speed 66Mbps, Unlimited
    Gift: None
  • Plusnet £22.99 (*35.98)
    Avg. Speed 36Mbps, Unlimited
    Gift: £50 Reward Card
  • Vodafone £23.00
    Avg. Speed 35Mbps, Unlimited
    Gift: None
Prices inc. Line Rental | View All
The Top 20 Category Tags
  1. BT (2768)
  2. FTTP (2746)
  3. FTTC (1783)
  4. Building Digital UK (1740)
  5. Politics (1662)
  6. Openreach (1619)
  7. Business (1429)
  8. FTTH (1340)
  9. Statistics (1240)
  10. Mobile Broadband (1221)
  11. Fibre Optic (1062)
  12. 4G (1052)
  13. Wireless Internet (1020)
  14. Ofcom Regulation (1014)
  15. Virgin Media (1004)
  16. EE (696)
  17. Sky Broadband (668)
  18. Vodafone (666)
  19. TalkTalk (661)
  20. 5G (514)
Promotion
Helpful ISP Guides and Tips
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
Sponsored

Copyright © 1999 to Present - ISPreview.co.uk - All Rights Reserved - Terms , Privacy and Cookie Policy , Links , Website Rules , Contact