Ofcom vs Mid-contract price rises
Ofcom has released figures breaking down customer complaints over mid-contract price rises; 25 per cent of customers think that mid-contract price rises are simply ‘unfair’ when they’ve already committed to a long-term contract.
Another 24 per cent of the surveyed customers complained about a lack of transparency regarding price rises, assuming that the cost would be ‘fixed’ for the duration of 12, 18 or 24 months.
A further 16 per cent complained about the amount by which prices had been increased by ISPs and 10 per cent had beef with termination charges that were levied at customers wanting to leave contracts early as a result of price rises.
The Ofcom figures show that a rather angry 3 per cent complained about ‘all’ the above issues – with 22 per cent expressing a general dissatisfaction with price rises altogether.
Publication of the figures comes after an unnamed ISP requested that Ofcom release them. The telecoms regulator announced last October that it would be forcing ISPs to make the costs more transparent. Earlier this month, Ofcom announced plans to do away with early termination fees altogether, in the event of an ISP hiking prices mid-contract.
The consultation closes on March 14 and Ofcom is expected to announce a final ruling in June this year.
January 16, 2013
What’s the deal with mid-contract price rises?
At the moment, ISPs can make price changes to broadband, landline and mobile contracts at any time, so long as they give their customers a month’s notice. Customers will also be given the option to leave their contract early without having to pay an exit fee or termination charge.
Under current Ofcom rules ISPs are required to give customers a minimum of one month’s notice of any change to their contract that is likely to be of ‘material detriment’ and customers must be able to withdraw from their contract without having to pay an exit fee following the notice.
So far Ofcom has not issued any guidance on what is likely to constitute ‘material detriment’, leaving it for ISPs to decide.
One of the solutions Ofcom is proposing is to let ISPs notify consumers for any price increase under a contract, and to allow them to withdraw from that contract without any penalty regardless of the level of the price rise.
Previous news stories about Ofcom vs Mid-Contract Price Rises
Ofcom has announced plans to protect consumers from mid-contract price rises which will see subscribers able to leave a contract without paying an exit fee.
Exit fees, break clauses or termination charges are usually levelled at customers if they leave a broadband contract before the 12, 18 or 24 month period is up.
However this also sees customers potentially vulnerable to mid-contract price hikes which they might not be able to do anything about. Ofcom proposes to modify one of its existing rules which would do away with exit fees in the event of an ISP raising prices during the contract term.
When BT, Sky and TalkTalk raised prices last year they gave customers the opportunity to leave without penalty. Under current rules, ISPs are required to give 30 days notice to customers if the price rises are likely to be of ‘material detriment’ – if they’re a significant price rise.
Ofcom has not offered any guidance on what exactly ‘material detriment’ means, leaving up to ISPs to decide. So in future, all ISPs could be required to let customers know in advance no matter how much the price increases by.
Ofcom’s consultation on its new rules which closes on March 14 and expects to publish a decision in June 2013.
January 3, 2013