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Ofcom announces new measures for fairer broadband prices

Ofcom announces new measures for fairer broadband prices

In a series of measures published on Wednesday, Ofcom has laid out a plan of action for internet service providers to make broadband package prices fairer for UK customers.

The three main takeaways of its new report are for providers to:

  • Cut prices for out-of-contract customers
  • Implement protective measures for vulnerable customers
  • Be more transparent about other broadband deals for people who are shopping around

This announcement follows Ofcom’s review conducted on the current pricing landscape for broadband packages, and comes after some preemptive changes from providers like Virgin Media and TalkTalk, which were made in anticipation of the new guidelines.

So what do these new rules mean for internet service providers?

Cutting costs for out-of-contract customers

Ofcom’s pricing review found that customers who switch save an average of £108-£120 more than those who fall out of contract.

young woman using computer

Since out-of-contract customers make up a sizeable 41% of broadband users — and soon people who are reaching the end of their contract will have to be notified beforehand — providers now must ensure they are being charged at an equal rate.

This is especially helpful for customers who don’t have access to superfast broadband, because they’ll no longer have to pay the same, or higher, prices for slower internet speeds.

Here’s what some of the biggest UK providers have committed to.

BT Group

  • Capping the price difference between in- and out-of contract packages from February 2020
  • Guaranteeing those without access to Superfast broadband will not be paying more than new Superfast users from mid-2020
  • BT Broadband, EE Broadband and Plusnet have all committed to ensuring out-of-contract prices will be capped at the rate of inflation
  • BT will also allow existing customers access to the same prices as new customers when sending out its Annual Best Tariff or End of Contract notifications

Sky Broadband

  • It has already capped the in- and out-of-contract price difference to £5 per month
  • Like BT, new and existing Sky customers will see equal prices when notified about their annual best tariff or end of their contract

TalkTalk

  • Annual reviews to take place to ensure vulnerable customers who are out-of-contract are given the best tariffs
  • TalkTalk has ensured out-of-contract prices won’t rise above the inflation rate
  • It will also be allowing new and existing customers access to the same prices when they are notified of the end of their contract in 2020

Virgin Media

  • Annual reviews starting in February 2020 for vulnerable customers

Is this good news for consumers?

Our Head of Regulation, Richard Neudegg, had this to say:

“It’s good to see the watchdog looking at different ways to engage the 41% of broadband users who are currently out of contract, and these proposals build on the work that Ofcom has been doing in the fight for fairer practices for consumers.

“It is reassuring to see that the big broadband providers have committed to helping customers who fall out of contract - although with the regulator’s End of Contract Notification rules coming into effect in February, providers know that their customers will shortly be more empowered than ever to hold them to account.”

Financial support and better advice for vulnerable customers

Ofcom has recognised that customers deemed vulnerable — users who are elderly, unemployed or disabled, for example — may ‘face barriers’ to the full extent of their broadband package or miss out on opportunities to get a cheaper deal. As a result, it has established that these people should receive better customer care from their provider and have access to the most competitive prices.

virgin media vulnerable customers

One action tasked to providers regarding customers on low incomes is the introduction of a specific, targeted tariff that more bespokely meets their needs — a policy change that would require new legislation to work.

On this, Richard Neudegg commented:

“Ofcom is right to focus on helping vulnerable customers who sometimes lack the ability or confidence to push for a better deal. And we are pleased to see action on unfair prices for those limited number of households who don't have access to superfast broadband.”

Create easier ways for customers to shop around

The telecoms regulator wants providers to start trialling ways to make it easier for customers to browse the full extent of broadband deals available to them when shopping for a new tariff.

While the specific elements of these trials are yet to be revealed, it is a noticeable shift from Ofcom’s usual stance to allow providers to trial their own methods of implementing this, rather than its more familiar, but more prescriptive, approach to new policy changes.

Richard’s take is that:

“Consumers will always need to take responsibility if they want to ensure they are on the best deal for them. If you are out of contract, act now and see what deals are currently available. If you are happy with the current service you are receiving, you can ask your supplier for a better price.

“Customers on standard broadband connections who have fallen out of contract can often upgrade to superfast services and pay less at the same time.”

Thinking of switching broadband? Take a look at our top broadband deals.

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