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UPDATE Ofcom Bans Rolling Fixed Line UK Phone and Broadband ISP Contracts

Posted: 13th Sep, 2011 By: MarkJ
ofcom ukThe communications regulator, Ofcom UK, has today banned contracts that automatically rollover (renew) unless you opt-out. The practice, which is used by some broadband ISP and telecoms firms (e.g. BT Retail) in the UK to "tie customers into repeated minimum contract periods" (i.e. makes it harder to leave), will be officially outlawed from December 2011.

Apparently some 15% of UK residential consumers are on Automatically Renewable Contracts (ARCs). The ban will apply to both landline and broadband services that are sold to home and small business customers.

Ofcom's Chief Executive, Ed Richards, said:

"Ofcom’s evidence shows that ARCs raise barriers to effective competition by locking customers into long term deals with little additional benefit. Our concern about the effect of ARCs and other ‘lock in’ mechanisms led to our decision to ban them in the communications sector."

Many complained that ARCs failed to provide sufficient cancellation rights, especially for existing customers who signed-up to renewable contracts over the phone. This was especially troubling because ISPs often impose a penalty fee for leaving "early", even though the customer might have already completed their primary 12 month+ contract run.

In order to avoid disrupting current deals Ofcom, which first proposed today's move back in March 2011 (here), will implement the ban in two phases. The sale of new ARCs will be prohibited from 31st December 2011 and must then be completed removed from both new and existing packages by the same date in 2012.

UPDATE 15th September 2011

A comment from Hull ISP KC .

Nick Thompson, Director of Consumer Services at KC, said:

"At KC we welcome Ofcom’s decision to ban rolling fixed line UK phone and broadband contracts from December this year. They can prevent consumers from enjoying much faster broadband speeds from other suppliers, something we’ve experienced as we expand our broadband services to new areas across East Yorkshire. We don’t deploy rolling contracts across our network and are committed to giving our customers the best possible service and fastest possible speeds. We’d encourage other service providers to follow our lead."
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