Study Slams UK Broadband ISPs for Post Contract Price Hikes of 62%

A new study of home broadband packages offered by some of the UK’s largest ISPs – including BT, Sky Broadband, TalkTalk, EE, Plusnet and Virgin Media – has claimed that subscribers can face “steep price rises” of up to 62.5% (an extra £152 annually) if they stay loyal to their provider and don’t switch away.

The culture of offering big discounts to new broadband ISP subscribers, which typically only last for the first minimum contract term after you sign-up (12 or 18 months tends to be the most common term length), is nothing new. Indeed many other industries offer similar promotions and energy providers will often drop you back to their standard variable rate tariff after the first term ends.

The obvious downside of this is that you’re likely to face a sharp post-contract price hike and in our experience not all ISPs make this information particularly clear, even during the order process. In fact often the post contract pricing will merely be consigned to the small print, which can be difficult to both find and understand (credits to BT and Sky Broadband for showing these clearly).

In an ideal world all ISPs should be stating their post-contract prices clearly on the packages and directly alongside each product (i.e. without needing to start the order process or tackle tedious small print), but sadly this often doesn’t happen. Publishing such key information would enable consumers to make an easier and more informed comparison.

Now a new study by uSwitch.com has re-examined the pricing of packages from the biggest ISPs and discovered that standard broadband contracts jump by an average of £152 a year (almost £13 a month) the day after their contracts end, while those on faster “fibre” based services (includes hybrid fibre) are said to face a 53% hike in their monthly payments (i.e. leaves them paying £158 more a year).

Table 1: Difference between in-contract and out-of-contract prices (standard ADSL packages)

Table 2: Difference between in-contract and out-of-contract prices (entry-level “fibre” packages)

Admittedly there are some caveats with this data, which the comparison site overlooks. For example, it should be noted that TalkTalk claims to allow existing customers to re-contract via “the same great deals as new customers” once they end their first contract term. Meanwhile others, such as First Utility, have pledged “not to increase your monthly charge” post-contract (we’re unsure how that one will hold up long-term).

Lest we forget that smaller ISPs also exist and these, despite tending to cost a bit more (you may get better service quality), are less likely to tie you into a long contract or hit you with a hefty price rise post-contract. Likewise when it comes to switching, choosing to pay rock bottom prices can sometimes mean a sacrifice in service or support quality (this is often location as well as ISP and technology choice [ADSL vs Cable etc.] dependent).

The study does at least remind us that Ofcom recently proposed new rules that will require broadband, phone, Pay TV and mobile providers to inform customers when they’re approaching the end of their minimum contract term (here). This is a useful change but there’s still room for encouraging ISPs to publish their post-contract pricing in a clearer and more transparent way.

On the flip side such discounting shouldn’t be feared and is a normal reflection of our aggressively competitive market. Nevertheless some providers do need to improve how they display their prices so as to avoid misleading consumers into joining a service that could turn out to be dramatically more expensive further down the road, but this seems unlikely to happen unless Ofcom or the Advertising Standards Authority (ASA) step in.

We note that only a small portion of people actually switch ISP in any given year (around 10-15%), which means that many are likely to stay loyal. We should point out that our own ISP Listings tend to put the post contract pricing in brackets alongside the main discounted contract prices (where that information is available to us and not hidden by the provider).

Consumers could also try calling an ISP directly and trying to haggle for a lower price at the end of their term: Retentions – Tips for Cutting Your Broadband Bill Without Switching ISP.