Post Contract Price Sting Hits UK Mobile and Broadband Consumers

A new survey of 2,002 adults from uSwitch.com has suggested that people in the United Kingdom could potentially be overpaying by a combined total of £108 million a month, due primarily to staying with a mobile operator or broadband ISP after their initial contracts have ended.

The survey noted that 15% of mobile and 32% of broadband customers have “fallen out of contract.” On top of that 79% of consumers weren’t aware that providers are not required to tell them when their contracts are due to end, which is something that annoyed 54% of the respondents.

Regular readers of ISPreview.co.uk will know that we’ve long made a point of highlighting post-contract prices in our ISP Listings. One of the reasons for that is because many operators only display prices or discounts that apply for the initial 12, 18 or 24 month contract term. After this you can be hit with a huge price rise, which often isn’t clear from either the product page or during sign-up.

For example, if you were to sign-up with BT’s 52Mbps Unlimited Infinity package today then you’d pay £29.99 per month (plus £29.99 one-off upfront) on an 18 month term. But you would then have to hunt through the operator’s small print (T&Cs) at the bottom of the page in order to learn that the price from month 19 (post contract) will jump to £41.99 per month.

Similarly some mobile operator’s that bundle handsets with their tariffs will continue to bill you the same amount even after your contract has ended, which is despite the fact that by that point you will have paid off the cost of the handset and so should ideally be on a cheaper SIM-only style tariff.

Back in 2016 the Advertising Standards Authority (ASA) had an opportunity to tackle this by making such prices more transparent (here), although at the time they told ISPreview.co.uk that their rules didn’t cover post-contract pricing because “these are costs that consumers can choose to avoid” (i.e. such as by switching ISP, even though Ofcom suggests that only about 10% a year do that).

Meanwhile nearly half (45%) of broadband customers, who don’t believe their contract has ended, were found to be in the dark about when their contract is actually due to finish. Similarly 40% of broadband customers said that knowing when their contract was coming to an end would prompt them to search out a cheaper or better bundle, while 47% would contact their ISP to renegotiate and 18% might switch provider altogether.

Richard Neudegg, Head of Regulation at uSwitch.com, said:

“It is simply not right or fair that consumers lose out on savings or the opportunity to upgrade to a better service because telecoms rules haven’t kept pace with other sectors.

Getting an end of contract notification is standard practice in so many other industries as a very basic measure to help keep consumers in control. The research suggests many users may simply assume it’s the same with telecoms.

If Ofcom were to introduce end of contract notifications – something they have the power to do – our research shows 89% of customers receiving them would be prompted to consider the quality and value of their service.”

In fairness a lot of mobile operators and ISPs, especially smaller providers, do keep their customers informed about such changes, although there’s clearly still room for improvement. Citizens Advice highlighted similar concerns last year as part of a separate study (here).

Clarifying post-contract pricing on packages would also make it easier for consumers to compare providers by longer term costs.

UPDATE 1st Feb 2018

Since uSwitch’s study was published we’ve noticed that BT has started posting their post-contract prices alongside broadband packages again. Well done BT. On the other hand they’ve done this before, only to remove it a few months later. Hopefully this time they’ll continue to set a good example.