Ofcom tells ISPs to be upfront about better broadband deals

Telecoms regulator Ofcom will make internet service providers (ISPs), mobile and landline operators and pay TV providers give consumers upfront information about how to switch to their best available tariffs when their current contracts are coming to an end, and every 12 months after that if the contract expires without the user switching.

The move is part of a wider package of measures set to take effect in 2019, that Ofcom hopes will help the broadband market to serve the interests of consumers better and improve competition. It comes at the tail-end of a consultation on the matter that kicked off in July.

Ofcom had found that as many as 20 million people in the UK were outside their minimum broadband or mobile contract period, and half of those faced price hikes – of up to 20%, in some cases – when their initial contracts expired. Statistics from comparison service uSwitch suggest that consumers are losing over £100m every month through overpaying.

“We are concerned that many loyal broadband customers are not getting the best deal they could,” said Ofcom chief executive Sharon White. “So we are reviewing broadband pricing practices and ensuring that customers get clear, accurate information from their provider about the best deals they offer.”

Alongside clear information on available packages, Ofcom is also launching a review of ISPs’ pricing practices, which will examine why some customers end up paying more than others for identical services – particularly when introductory offers have run out – and whether vulnerable customers might need better legal protection. It will also probe how mobile operators charge their customers for handsets when they are bundled with airtime in a single contract.

This will be backed by a consumer information campaign and website, Boost Your Broadband, backed by TV presenter and consumer rights advocate Gloria Hunniford, along with the Department for Digital, Culture, Media and Sport (DCMS), the Department for Business, Energy and Industrial Strategy (BEIS), and consumer body Which?. Consumers will be able to log on to find out what broadband services are available to them, and take impartial advice on how to get the best deals available.

“Millions of people could boost their broadband in the run-up to Christmas, when lots of families really need the internet,” said Hunniford. “So I’m encouraging people to visit the new website, which offers independent advice on how to get the best deal and possibly a faster service from your broadband company, with a single phone call.”

Digital minister Margot James added: “Our roll-out of superfast broadband is reaching thousands more homes and businesses every week and millions of people across the UK can now enjoy the clear benefits that superfast broadband provides.

“This is a welcome, positive step by Ofcom and I urge people to visit the website, check what services are available in their local area and then see if they can get a better deal.”

The regulator said that although 94% of business and residential properties in the UK can now access a so-called superfast broadband connection – usually using fibre-to-the-cabinet (FTTC) delivery technology – less than 50% of homes have taken up a service.

Also, there are still about four million homes that rely on old-style broadband packages that are long out of contract and could switch to a superfast service for the same, or less, money. Ofcom noted that the cheapest superfast services start at about £20 a month.

Richard Neudegg, head of regulation at uSwitch, welcomed Ofcom’s move, saying: “Consumers are getting very different outcomes from the broadband market. In many cases, this is simply due to a lack of awareness about the better services available to them.

“Millions of broadband customers are suffering from poor speeds and are stuck on old technology, when they could be upgrading to faster services and actually paying less. It is welcome that Ofcom has raised awareness of these issues today.”

Neudegg added: “Historically in telecoms, not enough has been done to put the power back into consumers’ hands. If customers are given the right tools, there is a real chance to improve households’ experience of services that are now critical in their day-to-day lives.”

However, Matt Powell of comparison site Broadband Genie pointed out that while it was true many consumers could switch to a faster package, not all of them actually need it.

“A cheap ADSL connection can cope with the demands of a small household mainly using it for web browsing and social media, and is still capable of handling more bandwidth-intensive tasks such as video streaming and downloads,” he said.

Cable.co.uk telecoms analyst Dan Howdle added: “It should come as no surprise that faster broadband is available to most users because not every household needs the fastest connection they can get. A 350Mbps connection from Virgin Media, for example, is available to around 60% of UK households, and is excessive in all but a handful of cases.

“While it is true that half the battle in finding the most suitable and cost-effective broadband deal for your household is the availability of information, there must also be the will to find a better deal on the part of the customer.

“Thanks to the ‘stickiness’ of bundled TV packages, physical equipment such as dishes, set-top boxes and cable installations, along with no small amount of apathy when it comes to shopping around, too many stick with what they have and, as such, pay more than they should.

“It remains to be seen whether greater knowledge of faster or cheaper broadband deals will drive action on the part of customers.”