Ofcom plans to introduce new regulation that will require communications providers to be more transparent on hidden and extra charges. The proposals are aimed at the various services under its remit, including fixed voice, mobile, broadband and pay TV. Ofcom believes that these additional charges can be unfair and are often overlooked by consumers when purchasing services, leaving them to actually be higher than they otherwise could be as they are not determined by competition. The number of complaints received by the regulator in relation to these, particularly in the areas of additional costs for a payment method other than direct debit and early termination costs have been high. One particular concern of Ofcom is that the higher charges are often paid by those on lower incomes, particularly non-direct debit charges.
One initial proposal is the introduction of a new telephony service by BT of a product called 'BT Basic' which will be available to people who receive certain Government benefits. It will feature a low cost fixed voice service, including some talk time, and no penalties for not paying by direct debit. It will also be available to consumers who have prepay mobile phones and/or broadband services. Ofcom is also in discussion with Kingston Communications about a reduced price social package. In terms of broadband access, Ofcom does not feel that the non-direct debit charges are a significant influence in the prevention of take up of broadband services by low income consumers, however there could be a need in the long term to look at the affordability and availability of broadband services. Currently, the Universal Service Obligation (USO) does not extend to broadband services, although this is due to be discussed by the European Commission this year.
The consultation has looked at various factors where it believes service providers are not being transparent or fair over costs and has various recommendations of what it expects. A summary of these from the consultation can be seen here:
Charges for paying by a non-direct debit method
Late payment, payment failure & restoration of service charges
Minimum contract periods & Early termination charges
New minimum contract following service change
Minimum notice period
Itemised & paper billing
Ceasing service charges
In terms of broadband, the changes should aid consumers in many ways, and help make sure people are aware of hidden costs that may be sprung upon them. One example is when users migrate to a fully unbundled provider such as TalkTalk, reconnecting to a BT service could cost £125. Adjustments to contract terms should also avoid consumers being tied to a provider for another 12 months when they change between their products (and there is no wholesale product change).
If you want to respond to the consultation, responses should be received by 8 May 2008. More details about how to respond and the full document can be found here.