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Tackling broadband 'loyalty penalty' to be focus for Ofcom

Tackling broadband 'loyalty penalty' to be focus for Ofcom

The government has set out its priorities for Ofcom for the year ahead, which will see the communications regulator focus closely on tackling the so-called 'loyalty penalty' paid by consumers who do not switch their phone and broadband providers.

According to the Department for Culture, Media and Sport (DCMS), this penalty, which is the result of customers failing to shop around for a better deal when they reach the end of their minimum contract period, adds up to around £1.3 billion a year.

It therefore called on Ofcom to address this, with the government to consider legislation if the regulator believes its current powers are not sufficient.

"Ofcom has a critical role in realising our shared connectivity aspirations for the UK," said DCMS Secretary of State Jeremy Wright.

"As well as ensuring the necessary improvements to broadband and mobile services, consumers must also be protected. I urge Ofcom to tackle harmful business practices and remove barriers to switching."

The move to tackle the loyalty penalty comes after a 'super-complaint' about the practice was received by the Competition and Markets Authority (CMA) last year from the Citizens Advice Bureau.

Investigating the issue, the CMA found some 8.7 million broadband customers are affected by this, with the average household paying £112 more than necessary for broadband, with this rising to £156 for 'triple-play' users who get broadband, phone and TV services from the same provider.

Other priorities set out by the government in its latest strategy update for Ofcom include steps to support investment in reliable, gigabit-capable broadband networks across the country and to improve mobile broadband coverage in rural areas.

DCMS stated these measures will be "instrumental" in helping to meet the government’s targets of having nationwide full fibre broadband coverage by 2033 and increasing geographic mobile coverage to 95 per cent of the UK by 2022.

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