Households could save more than £150 every year from ‘end of contract warnings’ but uSwitch says regulator’s proposals could risk extra fees.
Broadband customers could save over £150 a year thanks to new measures proposed by telecoms regulator Ofcom. The proposals would force providers to notify customers that their contract is about to expire.
According to uSwitch, broadband providers hike prices by 62% on average when the initial contract expires. It says the cumulative cost of such hikes is over £1 billion each year.
As a result the regulator is currently consulting on proposals to force broadband providers to notify customers 40-70 days before their contract expires.
But this proposal will leave customers at risk of early-exit fees if they decide to quit a contract so far ahead of expiration. As it is so far ahead customers could simply forget to switch and save too.
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Richard Neudegg, head of regulation at uSwitch.com, explains: “Providers have gotten away with not having to supply this very basic information for years, with consumers losing billions in the process."
The comparison service says the ideal period should be around 21 days ahead.
Mr Neudegg adds: “Allowing companies to notify customers a whopping 70 days before their packages are due to end - as Ofcom is suggesting - risks letting providers get off scot-free as the information is not yet relevant and exit penalties still apply.”
Finally, Mr Neudegg says: “The regulator has a real chance to address these issues that have kept customers in the dark for far too long - but unless these notifications are optimally designed to encourage consumers to engage with the market, they will effectively maintain the status quo.
“Broadband and mobile providers lag far behind other industries, and with every day they are not required to send out an end of contract notification costing customers millions, these proposals cannot be implemented soon enough.”
Responding to Mr Neudegg, an Ofcom spokesperson says that the 40-70 days proposal comes from consumer feedback that they want to be reminded ahead of a typical 30-day notice cancellation period, but early enough to have time to act.
The spokesperson adds: “We’re concerned providers are not giving people the information they need about their contracts, and many are paying more than they need to. That’s why we’ve set out plans to force companies to tell customers when their minimum contract is coming to an end, and give them advice on their options. We will consider all responses to our consultation before we make our final decision.”
Top tips to save on your broadband
With providers hiking broadband costs by 62% on average after initial contract periods end, there are a few key tips to ensure you don't lose out.
1. Set a diary reminder. This will prompt you that your contract is coming up to its end, and that you should be thinking about what to do next.
2. Check your usage. Deals often bundle in other services such as a phone landline, or even a TV subscription. But if you're not frequently using these services, consider downgrading. Research shows that nearly half a billion pounds is wasted every year on unsused telephone landlines.
3. Haggle. If you'd like to stay with your current provider, speak to them and negotiate a better price. Often the provider would rather keep you as a paying customer than risk losing your business.
4. Leave. If your provider won't budge on its price rise, vote with your feet and search online for a better deal and pick a new provider who will be happy for your custom.