UK altnet demands regulatory probe into broadband mid-contract price hikes

Hyperoptic, which claims to be the UK’s largest exclusively full-fibre internet service provider, is calling on UK communications regulator Ofcom to investigate the use of above-inflation mid-contract price rises being implemented by many major broadband providers.

Current Ofcom rules require providers to offer customers the right to exit their contract, penalty-free, if they surprise them with mid-contract price rises. However, Hyperoptic notes that most broadband providers avoid this by adding details of an annual price rise into the “small print” of their customer contract. In its call, it cited BT, EE, Plusnet, Vodafone, O2, TalkTalk, Shell Energy and Sky.

Under Ofcom General Condition C1 (1.14-1.17), any price variation clause must be sufficiently prominent and transparent at the time of purchase, so that the customer can be informed of their contract working in this way.

Hyperoptic has written to Ofcom to request an investigation into this industry practice and consider reform that would allow impacted customers to terminate their agreement and switch providers, penalty-free. It said that such practices can lock customers into a contract where they end up paying significantly more than the initial advertised price they signed up for, noting that with UK inflation running at a thirty-year high, this has led to some customers facing a hike of almost 10%.

Moreover, in a Hyperoptic study of more than 2,000 UK consumers from January 2022, 60% of respondents stated that they were not aware the price of their broadband would increase during their contract. Almost half (47%) felt misled by their broadband provider, and a similar percentage (48%) would not have signed their contract if they had been aware. These results, said the broadband provider, indicate that the requirements of Ofcom General Condition C1 (1.14-1.17) are not being met.

“Households are already hurting from inflationary pressure on core products like food, petrol and energy,” said James Fredrickson, director of policy and regulatory affairs at Hyperoptic. “It is, then, startling to see that the majority of broadband customers are unaware of being locked into price rises of this scale.

“It is imperative that Ofcom, as our industry regulator, urgently investigates industry compliance with the rules governing price variation clauses,” he said. “As part of that, Ofcom should also consider making these price increases far more visible to customers – with a view to ultimately giving them the right to leave their agreement without charge should they feel that they could get a better deal elsewhere. So far, Ofcom has commented to advise that companies do need to invest in their networks, but this is a difficult time for many people to deal with price rises. Under our rules, providers must set out price rises clearly before customers sign up, and cannot just include them in the small print.”

Hyperoptic has also launched a petition that calls for freedom for consumers to switch broadband providers – penalty-free – whenever they are faced with an unfair price hike. It will be sharing these signatures with Ofcom as evidence of consumer sentiment.

Hyperoptic’s network extends to more than 750,000 homes and businesses, and is approaching hitting the milestone of a quarter of a million customers now live, with more than 230,000 customers currently receiving its full-fibre service. The company focuses exclusively on high-density urban areas, connecting all building types across multi-dwelling units, existing developments and new-build homes.