End of Contract Letters by UK Broadband ISPs Boost Re-Contracting

Ofcom has today posted some additional analysis on the impact of their End-of-Contract Notifications (ECN) system, which reveals that customer re-contracting on major broadband ISPs has increased as a result of its introduction – varying from a rise of 13% on Plusnet to just 3% on TalkTalk.

The regulator’s ECN system – as first introduced in February 2020 – requires all fixed broadband, mobile, home phone and pay TV providers to issue such notifications to existing subscribers at the end of their term (sent by text, email or letter). The move was intended to help tackle the so-called “loyalty penalty” by keeping customers informed about the best deals on their current provider and encouraging switching.

The additional analysis published today is intended to complement Ofcom’s previous November 2021 review (here), which among other things found that the proportion of broadband customers who switched or re-contracted three months prior to or three months after their minimum contract period ended increased from 47% in July 2019 to 62% in September 2020.

In the new update, Ofcom used data provided to them by broadband ISPs to measure the impact of their ECN policy intervention on: 1) the rate at which customers re-contract at the end of their minimum contract period, and 2) the prices broadband customers paid after re-contracting in response to an ECN.

Econometric analysis – Percentage point increase in re-contracting due to ECNs

Plusnet 13%
Sky Broadband 8%
BT 10%
TalkTalk 3%
Virgin Media 10%
EE 10%

Econometric analysis – Price effects of re-contracting in response to receiving an ECN
(the average monthly price differences for those who responded to an ECN)

Plusnet = Statistically insignificant effect
Sky Broadband -£9.26
BT £2.45
TalkTalk £7.81
Virgin Media -£7.74
EE = Statistically insignificant effect

Clearly, re-contracting customers with some communication providers paid lower prices, and higher prices with others. Naturally, those who re-contract can’t always expect to get a cheaper price than they currently pay for their existing service, which is because prices often rise each year, and you’ll usually only re-contract at the end of a longer 18-24 month term. But it may still save you money vs not re-contracting at all (post-contract pricing), although others may prefer to switch ISP if it doesn’t.

“Overall, our latest analysis provides further evidence that ECNs increased re-contracting among broadband customers after the ECNs came into effect in February 2020, and we can attribute some of the increase in re-contracting in the broadband market directly to the ECN policy, rather than external factors,” added Ofcom.