{"id":33076,"date":"2022-12-01T10:10:44","date_gmt":"2022-12-01T10:10:44","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=33076"},"modified":"2022-12-02T16:02:01","modified_gmt":"2022-12-02T16:02:01","slug":"ofcom-uk-to-investigate-transparency-of-mid-contract-broadband-price-hikes","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/12\/ofcom-uk-to-investigate-transparency-of-mid-contract-broadband-price-hikes.html","title":{"rendered":"Ofcom UK Probes Transparency of Mid-Contract Broadband Price Hikes UPDATE"},"content":{"rendered":"

The UK telecoms regulator, Ofcom<\/a>, has today launched a new industry-wide enforcement programme, which will monitor and examine whether in-contract price rises were being set out clearly enough by broadband ISP and phone providers before customers signed up.<\/p>\n

In an ideal world, the price you’re asked to pay when you first sign-up to a new provider or package would remain the same until the end of your contract term, but as we all know \u2013 many broadband, phone and mobile providers don’t do that and will increase your prices mid-term, often significantly.<\/p>\n

NOTE:<\/strong> According to Ofcom<\/a>’s rules, if a provider included potential future price rises in the terms of a contract (e.g. CPI increases), then they have to be set out prominently and transparently at the point of sale. Failing to do this might allow customers to exit their contract penalty free.<\/div>\n

Some providers (e.g. Sky Broadband<\/a> and Virgin Media<\/a>) approach this by doing a fairly static price increase each year, which can sometimes trigger Ofcom<\/a>\u2019s rule on mid-contract hikes and enable you to exit your contract penalty free (you won\u2019t know what the increase will be, or when it might occur, until they announce it). But those hikes have not been as dramatic is some.<\/p>\n

However, other providers (e.g. BT<\/a>, EE<\/a>, TalkTalk<\/a>) write a policy into their contract terms that enables them to increase their prices each year by around 3-4% + CPI or RPI (inflation), which is more transparent. But the details are often hidden in the small print, and a lot of consumers don’t actually understand inflation all that well. On top of that, the extra transparency means you can’t exit your contract without penalty when the hike hits.<\/p>\n

Ofcom has now decided to take a closer look<\/strong><\/a>, which comes after they analysed customer complaints that were made between 1st March 2021 and 16th June 2022, which they say indicates that some consumers “may not have been provided with sufficiently clear information about in-contract price rises, which are usually applied in March or April each year<\/em>“.<\/p>\n

Lindsey Fussell, Ofcom’s Networks and Communications Group Director, said: <\/strong><\/p>\n

“As millions of people are having to deal with rising household bills, it is more important than ever that telecoms companies don\u2019t shirk their responsibilities and keep customers fully informed about what they are signing up to.<\/p>\n

It\u2019s vital that people are told clearly upfront about any future price rises they will face while they are in contract, and we\u2019re investigating to check whether this happened in practice.”<\/p><\/blockquote>\n

Ofcom will now collect further information from a range of providers to assess the steps they have taken to make these terms prominent and transparent. “If we identify specific issues with providers complying with our rules, we may launch separate investigations into individual firms<\/em>,” said the regulator. But such investigations tend to take a long time to reach completion, so it might be a while before we see some solid results from all this.<\/p>\n

In the meantime, it’s worth noting that the Committees of Advertising Practice (CAP and BCAP) – sister body to the Advertising Standards Authority<\/a> (ASA) – is currently known to be developing new guidance that would require information about mid-contract price hikes to be more prominently stated in ads by broadband ISPs and mobile operators to “avoid misleading consumers<\/em>” (here<\/a>). We suspect that this may have a more immediate impact, once the outcome is published in the near future.<\/p>\n

It’s worth adding that the 16th June 2022 date mentioned earlier is no accident. Indeed, it reflects the fact that, since 17th June 2022, new, strengthened rules were introduced that require telecoms firms to provide customers with clearer and simpler information before they sign up to a new deal (here<\/a>). In other words, everything after 17th would have to be judged in a different context of rules.<\/p>\n

UPDATE 11:43am<\/strong><\/p>\n

We’ve had a comment from Hyperoptic<\/a>.<\/p>\n

Dana Tobak, Hyperoptic<\/a> CEO, said:<\/strong><\/p>\n

“This is a great step forward in preventing the consumer harm of mid-contract price rises. As we highlighted in my letter to Ofcom in April, there\u2019s overwhelming evidence that consumers are unaware of contract clauses, and how they will be affected by them – which is particularly important in this cost-of-living crisis.”<\/p><\/blockquote>\n

UPDATE 2nd Dec 2022<\/strong><\/p>\n

Giganet has also commented.<\/p>\n

Jarlath Finnegan, Chief Executive Officer at Giganet, said:<\/strong><\/p>\n

“With the cost of living rising and household budgets being squeezed, it is imperative providers are completely transparent when it comes to the terms and conditions of their broadband packages. Providers must do the decent thing and make it clear there may be mid-contract bill increases and exit fees.<\/p>\n

At Giganet, our focus is meeting demand by delivering reliable, fair, and fast full fibre broadband, with excellent customer service. This includes abolishing exit fees and nasty mid-contract price hikes – which are so often hidden in the small print.<\/p>\n

At this time, we all need certainty, and knowing exactly what we are going to pay \u2013 and for how long \u2013 is vital.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

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