{"id":33022,"date":"2022-11-25T10:35:18","date_gmt":"2022-11-25T10:35:18","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=33022"},"modified":"2022-11-25T10:44:56","modified_gmt":"2022-11-25T10:44:56","slug":"consumer-pricing-bill-might-ban-discounts-for-new-uk-broadband-customers","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/11\/consumer-pricing-bill-might-ban-discounts-for-new-uk-broadband-customers.html","title":{"rendered":"Consumer Pricing Bill Might Ban Discounts for New UK Broadband Customers"},"content":{"rendered":"

The Consumer Pricing Bill<\/a> (CPB), which seeks to “prohibit the practice of offering preferential pricing to new customers compared to existing customers<\/em>“, will today get its second reading in the House of Commons. The Private Members Bill (PMB) could, if passed, effectively prevent first term discounts on broadband ISP and mobile packages.<\/p>\n

At present new customers to a broadband, mobile or other service frequently benefit from big discounts that are designed to attract them, which often run for the entire length of your first contract term. After that the price you pay typically increases, often dramatically, and customers who choose to remain loyal (post-contract) may find that they can’t access the same deals as new customers (aka – “loyalty penalty<\/em>“).<\/p>\n

The practice of offering discounts to grow take-up is fairly common amongst the market’s largest providers and, indeed, in any aggressively competitive commercial market (this is by no means a telecoms specific issue). On the flip side, many smaller providers don’t play this game.<\/p>\n

In recent years, Ofcom<\/a> has implemented various changes to balance this, such as the introduction of Social Tariffs<\/strong><\/a> and End-of-Contract Notifications<\/strong><\/a> (ECN). This system requires all fixed broadband, mobile, home phone and pay TV providers to issue such notifications to existing subscribers at the end of their term, which are designed to keep them informed about the best deals on their current provider and to boost switching.<\/p>\n

However the new CPB, which has been tabled by Labour MP John Spellar<\/strong>, appears to advocate for the nuclear option to solving the discount problem (if we can call it a problem) by very generally “[p<\/em>rohibiting] the practice of offering preferential [lower] pricing to new customers compared<\/span> <\/em>to existing customers; and for connected purposes<\/em>.<\/span><\/span>” Providers that fail to do this could face penalties, such as fines.<\/p>\n

NOTE:<\/strong> The bill was actually tabled once before (here<\/a>), but it was culled when the prior 2021-2022 session of Parliament was prorogued.<\/div>\n

No Easy Fix<\/strong><\/span><\/h3>\n

On the one hand, it’s easy to understand the attraction of such a bill, since in all likelihood it would result in more standardised pricing and make it easier to compare packages between providers. This is particularly true when you consider that some ISPs still fail to make their post-discount (or post-contract) prices clear during the order process, which is an issue that we’ve raised countless times before (this could of course be fixed in other ways, such as via new advertising rules).<\/p>\n

On the other hand, commercial businesses do like to have some flexibility to compete on price and discounts in a competitive market. For example, operators that are investing to build new full fibre (FTTP<\/a>) broadband networks need to grow take-up and strategic discounts help to deliver that by pulling consumers away from established players.<\/p>\n

However, balancing against that, is the fact that banning the practice might also slow the ‘race to the bottom<\/em>‘ outcome on pricing in the current market (i.e. prices fall so far that gaining a return on the investment becomes difficult and quality suffers), which might in turn make investments in new infrastructure more attractive. But in reality, the downward pressure on prices from competition would still exist, even without discounting.<\/p>\n

Scrapping the approach entirely would also hit savvy consumers who save money by switching more often (i.e. they’d face higher prices) and it may be difficult to police in such a complex market (there are ways to do discounts by stealth, such as via subsidiaries). Suffice to say that figuring out whether such a law would be a good or bad thing is not always as simple as it sounds.<\/p>\n

Furthermore, there’s also a question mark over how far the law itself would extend, since the proposed text talks about applying it to both goods and services (e.g. stamp duty on homes? Airlines? – there will need to be some limitations). A major consultation or detailed impact assessment would first be required in order to guard against the law of unintended consequences.<\/p>\n

At the time of writing, the bill has yet to be fleshed out, and the reality is that it may never happen. Only a minority of PMBs ever become law (they can be tabled by any MP), but they do often serve a purpose by creating publicity around an issue and encouraging wider debate. In that sense, it will be interesting to see how it progresses, but our suspicion is that it will not survive the usual parliamentary process.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Consumer Pricing Bill (CPB), which seeks to “prohibit the practice of offering preferential pricing to new customers compared to existing customers“, will today get its second reading in the House of Commons. The Private Members Bill (PMB) could, if passed, effectively prevent first term discounts on broadband ISP and mobile packages.<\/p>\n","protected":false},"author":1,"featured_media":23255,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1,1645],"tags":[38],"class_list":["post-33022","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","category-key_uk_isp_industry_developments","tag-politics"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nConsumer Pricing Bill Might Ban Discounts for New UK Broadband Customers - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The Consumer Pricing Bill (CPB), which seeks to "prohibit the practice of offering preferential pricing to new customers compared to existing customers",\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2022\/11\/consumer-pricing-bill-might-ban-discounts-for-new-uk-broadband-customers.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Consumer Pricing Bill Might Ban Discounts for New UK Broadband Customers - 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