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Post Contract Broadband ISP Price Rises Still Causing Headache

Saturday, February 15th, 2020 (7:34 am) - Score 3,663

Consumer magazine Which? has today published yet another “Loyalty Penalty” focused survey of 7,517 members, which claims that 68% of current broadband ISP deals from the big operators see UK customers being hit with significant price hikes when their contract ends (some prices jumped by as much as 89%).

As usual the issue relates to the common practice of discounting, which exists across nearly all service sectors and is by no means unique to broadband. For example, ISPs will often try to entice new customers by offering big discounts during the first 12-24 month contract term, but after that the price (post-contract) will often jump significantly. Just to make matters worse, some providers are very poor at highlighting their post-contract prices.

Otherwise the magazine’s survey noted that 58% of broadband customers had been with their current ISP for 2 years+, which is longer than the maximum allowed consumer contract term of 24 months (i.e. many people choose to remain with their ISP post-contract). A previous study similarly found that those who switched ISP or haggled for a lower price were able to save an average of £120 a year (here).

Results – How long have you been with your ISP?
Up to 6 months – 11%
More than 6 months up to 1 year – 14%
More than 1 year and up to 2 years – 15%
More than 2 and up to 3 years – 12%
More than 3 years – 46%
Don’t know / can’t recall – 2%

NOTE: Which?’s analysis – conducted 5th Feb 2020 – included deals from BT, EE, John Lewis, Plusnet, Post Office, Sky Broadband, SSE, TalkTalk, Utility Warehouse and Zen Internet (but oddly not Virgin Media). No details were provided in their press release.

In fairness such discounting doesn’t have to be a concern, provided the ISPs make their post-contract prices completely clear – ideally right alongside any discounts. Equally it’s important to highlight that not all ISPs adopt the same model and the majority of smaller providers, which may offer advanced features (static IP etc.) and better quality, simply charge a set monthly fee that rarely ever changes.

Nevertheless it’s important to point out that Which?’s survey is timed to coincide with the start of Ofcom’s new end-of-contract notification system. The intention of this is to make broadband, phone and mobile customers aware of when their contract ends and what deals are available to them if they choose to stay or upgrade etc. (full details here).

Natalie Hitchins, Which? Head of Home Products and Services, said:

“Our research shows that far too many people are paying more than they need to for broadband, so this rule change to ensure people are notified before their contract ends – and potentially before their bills go up – is a positive step.

Anyone who thinks they are out of contract, paying too much or not happy with their current service should not wait until they receive a notification, you might find you save yourself hundreds of pounds a year if you haggle or switch.”

On top of that the regulator has also coaxed various new consumer fairness commitments out of the major providers, which are also summarised at the link above for contract notifications. Meanwhile savvy consumers already know that the best way to keep your bills down is to switch to a different provider or haggle for a lower price at the end of your minimum contract term (see our Retentions Tips article).

Richard Tang, Chairman and Founder of Zen Internet, said:

“Poor service and bad practice such as mid or end of contract price hikes mean consumers are not getting value for money from their broadband providers. Too often, they are hung out to dry, and this has needed to change for a while. Ultimately end of contract notifications are a great thing for consumers; the notifications help consumers to make informed decisions, to ensure that they are on the best, fairest deal for their needs.

All too often consumers are faced with price hikes during their contract, and Ofcom needs to address this too because it is just not right that big companies can change the contracts they have with individuals as and when they want. It is not an issue with Zen thanks to our Price for Life guarantee which promises we won’t increase the price so long as a customer stays with us. Our ethos is to focus on people – our staff, customers, and suppliers – first. This is all part of our commitment to make sure that our customers have the best experience possible.”

We should point out that even Which? adopt a similar strategy when selling magazines (e.g. they’re selling a 1 month trial for £1 and this automatically rises to £12.75 per month thereafter, unless you notify them to stop). Similarly Which? is arguably guilty of feeding the very problem that they aim to highlight by frequently running stories on new broadband deals that also fail to highlight the post-contract prices (e.g. here and here). People in glass houses.

Further changes are expected from Ofcom in the future in order to help protect vulnerable consumers.

Leave a Comment
4 Responses
  1. Avatar Philip Cheeseman

    I’ve always kept an eye on end of contract and setup a new contract to start on the day the old one finishes. Via a combination of cashback, prepaid debit cards and cut priced for x month deals I’ve usually end up paying about £20~25 a month for fttc and phone line. My father in law pays more for ADSL because he refuses to switch or even call up. I wonder if this sort of switch deal will dry up as isps fight harder to retain customers. I really hope not.

  2. Avatar Gary

    The whole practice really just shows the actual attitude these companies have towards their customers, they may talk about ‘Valued customers’ etc, but are more than happy to bump their profits from those very same people with these out of contract price rises.

    The service provided doesn’t cost any more to supply once you’re out of contract, pretty much the only thing they have ‘lost’ is the ability to rely on that income beyond their notice period.

    While it may all be covered in the terms and conditions and should be clearly stated in the contract you signed or agreed to, You’re basically saying tie yourself to another long term agreement or we’ll make you suffer (financially) Bordering on Extortion..no ? Of course you have choices stay and sign, or leave and take your business elsewhere so it isn’t Extortion.

    Reduced rate deals for a portion of the contract are a different matter, and that’s just an incentive to gain new business.

    My personal response to this kind of business attitude is to leave, I’ll get some other quotes and then let ‘retentions’ offer to beat or match it then kindly decline, Car and house insurance is the same, If they want me to stay then offer me a good deal at renewal, don’t try and offer me one once I’ve been pushed into shopping around.

    Sky TV is the tricky one, there’s no other provider so any threat to leave is often a bluff.

    Unlike Phillip, I do hope this business practice fades away, but as the services level out and we lose the huge differences in product performance, what are they going to do.

    • Avatar EndlessWaves

      I don’t think the distinction about whether the initial discount lasts part or all of the length of the initial contract is a meaningful one. About the only part of the responsibility for this I’d lay at the ISPs feet is making post-discount prices a lot less obvious than they should be.

      Most of the cause of this situation is customers buying based on initial discount, not ongoing cost. And perhaps journalists and comparison sites for promoting such deals.

  3. Avatar Amanda Kemp

    I have been a so called valued customer with BT for nine + years. Throughout that time I have noticed the declining standard of their service with the rising prices.slow internet speeds, internet dropping out at times ,being sold super fast fibre when it was not actually available in my area . I did contact BT to complain several times, but was always fobbed off with the fact that there was nothing wrong with my connection, coupled with the fact of having to speak to someone from a call centre in India, in my mind is not conducive to good customer care. The last time I complained I was offered an upgrade, assuring me that it would make the service better . I was offered one of those discs I should have had three, which I did ask for, but they were reluctant to send me,that garuntees a signal in every room,it most certainly did not. So having paid £80 odd a month I decided to change providers, but now have to pay nearly £500 as I have switched during my contract . Absolutely scandalous !!!!

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