Generally most of us accept 12 month contracts on broadband products and in return often get free broadband hardware. The rise of the value of the freebies which can be a laptop these days has seen contracts lengthen to 2 years in some cases. In a highly competitive market with new deals every few weeks, signing up to lengthy contracts can be risky as just like the stock market, performance of a provider now is no sure indicator to its future performance.
Update 18:30: To clarify things, we are discussing the Calls and Broadband packages which BT Retail has on its website here. The conditions on the page, are not clear as to whether the "Get Connected" option is a 18 month contract for both broadband and telephone, and whether the calls part is an automatic renewal. The conditions are clearer for the other two products "More Talk" and "Unlimited", which feature a 18 month contract at the top of the page, but the conditions reveal the calls part is on 12 month term with a rolling contract to a new 12 month term. If you are confused, then its a case of join the club.
BT’s rolling contract policy flies in the face of the majority of telecommunications providers’ renewals practices – where the default position at the end of a contract is that a customer becomes a free agent. This enables them to scour the market for the right deal for them and, if they wish, to change providers.
"We believe that rolling contracts are a sharp practice at any time, but particularly so in the current credit crunch and with given the riches available in the market," said Andrew Heaney from TalkTalk. "We would like to see these unfair rolling contracts stamped out and have already called upon Ofcom to take a firm line in this area."
Andrew Heaney continued: "BT cynically places the onus on its customers to cancel their contracts – simply because it knows that many of them will simply forget."
Jo Stockwell, 39, from south-west London, is a BT customer who's unhappy with the idea of rolling contracts: "I've been a BT customer since 2006 but my contract is coming to an end, so for the last 3 months I've been hassled by calls from them suggesting I move onto a rolling contract - apparently because I can save £3! I really wouldn't feel comfortable doing this as I don't like the idea of being tied in, and I think it makes it easier for companies to hike up their charges if they know you've got to stick with them. I'm seriously considering moving ISP and I'm doing some research into other alternatives at the moment."TalkTalk Press Release
We would have covered this news earlier when TalkTalk sent out a press release highlighting the issue, but we have been trying to decipher the BT Retail website and terms and conditions, which do not appear to set out the terms of the rolling contract in an easy to find or clear manner.
BT Retail says that it contacts customers 30 days before the expiry date of the calls contract to let people know about the renewal and give them a chance to move provider if they want, but how many people will understand the implications until they try to take up what are increasingly attractive offers from competitors.
Should Ofcom and other consumer bodies act on this change? It is something that is not uncommon in the business sector, but consumers are never assumed to have as much contract term knowledge as a business. Ofcom exists to ensure a fair and open market, and should really investigate these new contract rules. BT Retail is risking putting off a lot of new sign-ups, since even if this rolling contract only applies to a subset of their products, many people will not want to take the risk.
By having an 18 month contract on one part of a bundle and a 12 month contract on another component it is asking for confusion and for the average consumer to take the path of least resistance and stay with BT. Bundling telephone and broadband can lead to savings for people, but evaluating the best package is difficult, for example with BT to get the £10.27 line rental you must pay by Direct Debit and take paper free billing, not using these adds £2.73 to the monthly bill. While caller display is free if you sign up to BT Privacy, if do not make a small number of chargeable calls you will get charged for caller display, which will cost £2.50 per month from 1st April.
Second Update, Saturday 7th March: The renewable contract is in relation to traditional PSTN calls packages, and while it was not clear from the website, when the renewal window is active you do have the option of keeping the calls package and no lengthy contract, but it will cost you more per month. As an example the evening and weekend calls package will cost you an extra £2.65 per month if you do not accept the renewed 12 month contract. BT has got back to us, and this is where this clarification comes from.