Home
 » ISP News, Key Developments » 
Sponsored

Ofcom Probes UK Broadband ISP Prices and Tries to Boost Take-up UPDATE

Friday, December 14th, 2018 (8:33 am) - Score 1,734
contract notification letter example

The UK telecoms regulator has today launched a new review of broadband pricing to examine whether loyal (existing) and vulnerable ISP customers are being ripped-off. On top of that they’ve also set out their final proposals for end-of-contract notification letters, which will soon also tell you about the best deals.

Today’s announcement is designed to support the regulator’s new “Boost Your Broadband” campaign, which is centred around the launch of a basic information site that encourages consumers to take-up a “superfast broadband” (30Mbps+) or faster service. At present superfast networks are available to 94%+ of premises but we estimate that around 40% of lines are still on slow ADSL connections.

A number of factors tend to impact take-up, such as the higher prices charged for faster speeds, as well as customers being locked into long contract terms with their existing ISP and a lack of general awareness (i.e. locals may not know that a faster option exists) or interest in the new connectivity (i.e. if you have a decent ADSL2+ speed and only basic needs then you might feel less inclined to upgrade).

Otherwise Ofcom’s new website is sadly far from perfect, not least because its vague broadband speed checker doesn’t always seem to reflect the presence of alternative network (altnet) providers. In addition, it returns performance estimates for FTTC and ADSL2+ lines that often seem quite overly optimistic.

On other pages they also direct users toward Ofcom’s own accredited price comparison sites, none of which list any alternative network ISPs that may be available in your area or even show the latest “ultrafast broadband” (G.fast, FTTP) packages; except from Virgin Media of course. Some of their information and guidance is thus misleading.

On top of that we have some concerns about trying to boost take-up just before Christmas, which is a time of year when ISPs are already under strain due to the holiday period (low staffing) and related seasonal delays.

Broadband Price Review (Loyalty Penalty)

Over the past few months we’ve heard a lot about “loyalty penalties,” which is a general reference to how broadband ISP customers who remain with their provider and don’t haggle for a better price (i.e. after their minimum contract term has ended) will often end up paying more than new customers (i.e. only new customers benefit from discounts that are designed to attract them).

Such pricing and special offers are fairly normal for any aggressively competitive market, although not all ISPs are clear about how much you’ll pay post-contract (minimum term). The issue has become such a hot topic that the Competition and Markets Authority (CMA) recently opened a “super complaint” to examine the matter and determine whether vulnerable consumers need more protection (here).

In response Ofcom has today launched a new review of broadband companies’ pricing practices (here), which it says will “examine why some customers pay more than others, and whether vulnerable customers need extra protections to ensure they get a good deal.”

However it’s important to highlight that not all ISPs adopt the same model and many smaller providers, which may also offer advanced features (static IP etc.) and better service quality, simply charge a set monthly fee that rarely ever changes.

A few providers, such as TalkTalk, also offer an alternative approach by enabling existing customers to re-contract on to a lower price point than their standard rate. Alternatively it’s possible that a bit of haggling could save you a lot of money (see our Retentions Tips article) but only about 10% of consumers seem to ever do this (if you’re happy with the service then give negotiation a try first).

End of Contract Notifications

Ofcom has already proposed to tackle some of this by forcing broadband ISPs to issue End of Contract Notifications to existing subscribers (usually between 10-40 days before the end of your contract). This letter or email will include the end date of your current minimum term, details on the current package and what you’ll be paying if you stay etc.

Providers will also be required to send a one-off out-of-contract notification to all existing customers whose initial contract term has ended, and who weren’t given this information at the time. The notification itself would contain details of any changes to their price or services and let them know their options (upgrades, discount deals etc.).

Interestingly Ofcom initially said that this measure would not apply to those on shorter contract terms (i.e. less than 6 months), although in order to align with related EU rules this has now been removed. However the regulator does state that packages on 30 day rolling contracts won’t need to send notifications, which makes sense.

Example Notification (Article Continues Below)

contract notification letter example

Best Deal Alerts

On top of the new notifications, Ofcom has today proposed that all customers should also receive information on the best tariffs providers have available at the end of their fixed commitment period (on a mobile plan this must include at least one SIM-only deal for customers on bundled handset and airtime contracts).

This would also include information on any discounts available to new customers to ensure that customers are made aware of these deals and can see if they are losing out and should think about switching. In addition, all customers who remain out-of-contract will be “given information about their contract and their provider’s best tariffs.”

The new notifications would be annual and apply to broadband, mobile, landline phone and Pay TV providers. Ofcom said they will all have to “tell customers about their best available deal, both when their deals are coming to an end, and every year after that if they don’t change their deal.”

Sharon White, Ofcom CEO, said:

“We’re concerned that many loyal broadband customers aren’t getting the best deal they could.

So we’re reviewing broadband pricing practices and ensuring customers get clear, accurate information from their provider about the best deals they offer.”

Margot James MP, UK Digital Minister, said:

“Our rollout of superfast broadband is reaching thousands more homes and businesses every week and millions of people across the UK can now enjoy the clear benefits that superfast broadband provides. This is a welcome, positive step by Ofcom and I urge people to visit the website, check what services are available in their local area and then see if they can get a better deal.”

Ofcom said they will be consulting on the revised plans for customer alerts until 1st February 2019 and the new rules would then come into force during the second half of 2019 (i.e. after a 6 month implementation window), although they haven’t yet set a firm date for the outcome of the new pricing review.

We hope that the review will at least require ISPs to make their post-contract prices clearer, not least because at present we still see far too many that try to hide such details away in the small print or don’t tell you about it until you’ve already started the order process.

Furthermore we wouldn’t be surprised if vulnerable consumers (e.g. pensioners), who rarely change service and thus are less likely to benefit from any discounts, receive some additional protection. A precedent for this has already been set after Ofcom nudged BT to slash the cost of phone line rental by £7 to those customers who only took a phone service (here).

One final point worth making is that Ofcom’s drive to boost the take-up of faster broadband will no doubt assist the Government’s Broadband Delivery UK programme, specifically it’s gainshare / clawback clause. Suppliers (Openreach, Gigaclear etc.) for that are required to return part of the public investment when take-up in the intervention area rises above a certain level (e.g. 20%), which can be reinvested to boost coverage. BT alone has already provisionally set aside £712 million (here).

UPDATE 8:41am

The first comments have arrived.

Tristia Harrison, TalkTalk CEO, said:

“We welcome Ofcom action to stop providers penalising loyalty. Two years ago, TalkTalk took a stand against unfair pricing. We reduced prices for existing customers with the launch of new plans and started proactively contacting those approaching the end of their contract, encouraging them to re-sign to cheaper deals.

In two years, we have lowered the gap between what new and existing customers pay to just £1-2 per month, whilst the average gap in the rest of the market has grown to £13-15. If the market won’t follow TalkTalk’s lead voluntarily, it might be time for regulation that enforces fairer pricing.”

Katie Milligan, Openreach MD for Customer, Commercial & Propositions, said:

“More than 17 million homes and businesses could order a better service over our network today, but haven’t yet. That means they’re missing out on more reliable connections that would allow them to work from home more effectively, access entertainment and use multiple smart devices around the house, all at the same time and without interruption.

At Openreach, we’re committed to playing our part in upgrading the country onto better broadband. One of the ways we’re doing that is by offering long-term price reductions for our wholesale fibre broadband products, which we hope will encourage providers to upgrade their customers onto the faster, more dependable services we’ve built. We would encourage customers to get in touch with their providers today and discover what might be on offer in their area.”

Adrian Baschnonga, EY’s Telecoms Lead Analyst, said:

“Clearer information about broadband packages and pricing is good news for consumers. Introductory offers can confuse as much as attract customers, and complex bundles work against a smooth decision-making process. Ensuring that consumers feel more confident engaging with broadband packages will help unlock demand for the very latest services on the market.”

Greg Mesch, CEO of CityFibre, said:

“It is right for Ofcom to start to address problems created by a lack of impartial information available to broadband customers. It has never been more important to make sure that consumers are empowered to make an informed choice as we strive towards full fibre as standard by 2033. However, it is clear that barriers remain if consumers are still putting up with paying more for sub-standard services.

Ofcom should now expand the scope of this campaign to address the mis-selling of ‘fibre’ broadband. The failure of the ASA to address this and to allow advertisers to wrongly mislead customers into paying more for a ‘fibre’ service that is in fact delivered to their home over legacy-copper networks is perpetuating confusion, and Ofcom needs to step in to help consumers make an informed choice.”

UPDATE 17th Dec 2018

Budget ISP Direct Save Telecom has complained that Ofcom is doing a disservice to consumers, not least by directing them toward sites that only list a small section of the market.

Stavros Tsolakis, Chairman of Direct Save Telecom, said:

“It appears that the Ofcom announcement only really serves to promote Which? and the handful of comparison sites with this pointless accreditation. Ofcom are right in what they are saying – consumers are paying too much for their broadband.

The consumers own supplier may not provide the best possible deal in the market but there are suppliers out there who offer the same service for a better price. But if the very sites Ofcom promote do not provide the consumer with the best deals, we want to know how will this ever be possible?”

Add to Diigo
Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
33 Responses
  1. Avatar chris

    This was predicted many years ago. The customers who can get the ‘superfast’ speeds already had fairly decent connections, therefore many of them are satisfied with what they have. All that has happened with FTTC is those that were ok got souped up a bit and all the folk on EO lines and long faulty lines are still ignored. It is a superfarce.

    • Avatar FibreFred

      Not true (as I’ve said before)

      I had a 2Mbps connection. Now I’ve got 50Mbps

    • Avatar TheFacts

      Completely wrong, please learn.

    • Avatar Brian

      I’m one of those stuck on a long line with only ADSL max and broken upgrade promises

    • Avatar TheRealWorldFacts

      Chris is right, no learning required.
      TheFacts needs to stop the BT marketing trolling rubbish on this forum.
      I am on an ADSL line since the early 2000’s that indicated 8Mbit, and yet a well over a decade later, after many years of asking I still get below 4 mbit.
      All the while I see those already with superfast fast being selected for FTTP First, etc.
      My cabinet is FTTPoD enabled, but my location is (and to quote BT Closedreach) “not commercially viable”.
      BT Openreach are just money grabbers.

    • Avatar Fastman

      Realworld

      Closedreach) “not commercially viable”. BT Openreach are just money grabbers.

      you cab is assume is not viable either a commercial operator (any operator) probably) or part of the government funded programme I assume (as you never confirmed your cab) but that the real world whether you agree with it or not so you can either do nothing and snipe !!!!!, get another operator (best of luck with that one ) or co fund it with openreach — so what its to be

  2. Avatar Joe

    Mark, Have you tried prodding Ofcom for a response on the failings of their own website/checker?

    • Avatar Joe

      Wow – nvr tried ofcoms checker b4. Its garbage. I’m BT FttP so much easier from data collection than some obscure altnet but i’m listed as (standard) only! The speed estimation is 11mbs!!! Thats ~2x my old Adsl speed. Bt/ORs checker is much closer so they don’t appear to use that data.

    • Some general concerns were raised privately at the start of this week when we first heard about it, but Ofcom seemed unwavering in their direction.

    • Avatar Joe

      But its just embarrassing to have info just that poor. How can not just OR but even private sites like thinkbroadband return accurate results but Ofcom can’t

    • Avatar Andrew Ferguson

      What I don’t understand is Ofcom has and uses its powers of data collection from the providers, so how its checker can be so far out is hard to fathom.

      They have dumbed it all down and gone too far, i.e. the information to actually help the public is not in their checker.

      We have also raised the issues with Ofcom.

      I know what I do is not perfect, but we will always endeavour to get an error fixed asap, be that making a postcode slower, or adding a new small community provider.

    • Avatar Joe

      You’ve nothing to defend Andrew, you do a great job. It just boggles the mind that Ofcom can make such a mess of this (despite my low opinion of them to begin with.)

      It is very dumbed down. I total understand them trying to make it simple (but how hard is a ‘more info’ box with the technical details of the bb type)

      Where are they getting their data one wonders its not just a bit out of date but 1-2yrs

  3. Avatar Meadmodj

    There is a contradiction here Ofcom.

    ADSL pricing has risen so it is now dearer than FTTC (BT standard pricing). There is a small differential on the “offers” but by now the ADSL investment should have paid back and ADSL bandwidth is restricted so why is ADSL increasing or simply not being offered by ISPs in some FTTC areas.

    This Boost Your Broadband says “news, keep in touch with friends and family and some online shopping” only needs 10Mbps yet for most people now the cheapest option is now Superfast even if it doesn’t actually deliver that.

    Ofcom should ensure those paying for Superfast actually get it and those that only need an entry level product can get one.

    • Avatar EndlessWaves

      So don’t go with BT, there are plenty of ISPs offering ADSL packages for under £20 a month. Ofcom’s approach has always been to make BT Retail just one ISP of many with no special status.

    • Avatar Meadmodj

      My point is ADSL prices are rising and the objective appears to be its elimination. So those only need minimum broadband have to pay more for capacity they do not need or can’t actually achieve due to their line.

      I cited BT as they set the price point for the industry against which other ISPs then set theirs.

  4. Avatar Brian

    Notice the BT checker has now been updated from very pessimistic, to optimistic; but the Ofcom checker trumps the speed with a physically impossible figure, though it is correct in saying only ADSL is available.

    • Avatar Joe

      The old very pessimistic ones usually mean they have no data on your line so they guesstimate. ORs checker seems broadly to be slightly conservative on estimates now.

    • Avatar Andrew Ferguson

      On the Ofcom checker the line ‘standard broadband’ does not just equal ADSL/ADSL2+, it also includes VDSL2 if below 30 Mbps speeds and only shows the highest figure.

      So those in the less than ideal scenario it is not giving them the information to make a decision.

    • Avatar Joe

      Certainly i’d prefer it to say

      Speed X ADSL
      Speed Y VDSL2

      So people can see what change would help them.

    • Avatar AnotherTim

      @Andrew, does it definitely include ADSL? When I check my postcode no properties have any broadband available at all according to Ofcom’s checker, but we can all get ADSL2+ (at varying speeds). Nearby postcodes that have FTTC show superfast broadband is available, but don’t have any standard broadband shown as available but ADLS2+ is available for them too.

    • Avatar Andrew Ferguson

      @AnotherTim 100% sure it includes ADSL, found an ADSL only exchange it knew about the speeds. So seems you’ve found a problem. Did find a place where they say superfast is available, but it is only planned.

      For those not aware this one of the outputs from the Connected Nations dataset.

  5. Avatar Billy

    I had sub 2Mbps ADSL for 14 years because I live in a village in the middle of nowhere, but recently OR brought FTTP to the village and now I have an 80Mbps connection. It always feels like you’re being ignored, until you’re not.

    • Avatar Joe

      The numbers of low speed connections are dropping like a stone – but you’d hardly know it because its those that don’t have it that shout the loudest.

      My own near villages went from ADSL to OR FttP (with a touch of FTTC in the centre) or gigaclear over the last 2yrs or so.

    • Avatar AnotherTim

      @Joe, I don’t think the number of low speed connections are dropping like a stone. If you look at the recent ThinkBroadband figures for the number of sub-USO connections they fell by 3400 in a month. That sounds really good until you realize at that rate it will take 20 years to upgrade all sub-USO lines.

    • Avatar Joe

      ~1m lines in 2017 to ~300k when USO is due to start.

  6. Avatar Michael V

    I don’t believe ISPs need to charge such high prices. BT fibre is around £30 before line rental. Vodafone home broadband has the right idea. They don’t sell DSL anymore [but maintain the existing connections] their Superfast 1 plan is £22/24. Including line rental. Yeah, talk plans are add ons but more people don’t need a home phone these days. I’ve had their service for two months & it’s really great.

  7. Avatar ron

    I am with plusnet and have been for 10 years , previously on FTTC 80/20 Just moved to east coast and had to take ADSL2 19/0.8 because BT Cabinet is full and there is no way to check when if ever the cabinet will be increased size .
    This is not the ISP its BT Openreach 🙁

    • Avatar Fastman

      depends who funded the Cab it that cab was funded by the BDUk programme if might not get upgraded for some period of time

  8. Avatar Malcolm Beaton

    I do feel that if the price you pay was determined more by the speed you get it would fairer – paying £ 15 a month for around 5mb when friends are getting 35mb for £ 20 just doesn’t seem fair. They also have more and more offers on fibre packages but less on dsl packages. I think it could also hopefully stimulate investment in the areas which are stuck on slow speeds.

    • Avatar Joe

      (sighs) So the cost of providing the service should just be swallowed by everyone else to an even greater degree.

  9. Avatar Lewis Tunnicliffe

    A very interesting day for the broadband industry. Some of the changes in this article are welcomed (i.e. notification of end of contract and notification of the suppliers best prices available at the end of any contract term).

    Ofcom are right in what they are saying – customers are paying too much for their broadband. The consumers own supplier may not provide the best possible deal in the market but there are suppliers out there who offer the same service for a better price.

    There are a number of suppliers who offer standard broadband from £16.95 pcm and Fibre broadband from £22.95 pcm. Deals are based on 12 month contracts, include FREE wireless routers and no setup fees.

    But I bet you can’t find these deals, or any low cost providers on the major Ofcom accredited comparison sites. This is because of the excessive commissions they demand.

    To find the best value deals you need to visit the whole of market comparison sites, such as uSwitch, broadbanddeals.co.uk, broadband.co.uk or Broadband Genie etc.

  10. Avatar skyanon

    While I can see the value in ofcoms decision it’s going to lead to 2 things firstly prices will rise to compensate for the loss in revenue and secondly there will be a reduction in the number employed by these companies for retentions agents. It’s a good idea but it’s also self defeating in the end.

    Your friendly sky retentions agent x

Leave a Reply

Your e-mail address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

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.
Promotion
Cheapest Superfast ISPs
  • Hyperoptic £18.00 (*22.00)
    Avg. Speed 30Mbps, Unlimited
    Gift: Code: SPRING19
  • Vodafone £21.00 (*23.00)
    Avg. Speed 35Mbps, Unlimited
    Gift: None
  • TalkTalk £22.50
    Avg. Speed 36Mbps, Unlimited
    Gift: None
  • Direct Save Telecom £22.95 (*29.95)
    Avg. Speed 35Mbps, Unlimited
    Gift: None
  • Plusnet £23.99 (*34.98)
    Avg. Speed 36Mbps, Unlimited
    Gift: None
Prices inc. Line Rental | View All
The Top 20 Category Tags
  1. BT (2348)
  2. FTTP (1881)
  3. FTTC (1555)
  4. Broadband Delivery UK (1525)
  5. Politics (1292)
  6. Openreach (1285)
  7. Business (1140)
  8. Statistics (1010)
  9. Mobile Broadband (934)
  10. Fibre Optic (914)
  11. FTTH (901)
  12. Ofcom Regulation (845)
  13. Wireless Internet (842)
  14. 4G (814)
  15. Virgin Media (773)
  16. Sky Broadband (563)
  17. TalkTalk (543)
  18. EE (530)
  19. Vodafone (436)
  20. Security (378)
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