Given the amount of advertising around broadband switching and broadband offers one would hope that everyone is keeping an eye on what they are actually paying, rather than blindly assuming their provider will automatically switch them to the cheapest tariff. Unfortunately a cautionary note from Citizens Advice suggests that 35% don't realise that they may be met with price hikes after their initial deal ends.
"A new report from the national charity reveals that more than a third (35%) of broadband customers don’t realise they could face price hikes by staying on the same contract with their provider after their initial deal ends.
With broadband customers staying on the same contract for 4 years on average, Citizens Advice warns customers are being charged a ‘loyalty penalty’ for remaining on the same deal.
Citizens Advice wants broadband providers to help customers avoid loyalty penalties by being much clearer about how much their services will cost after the initial fixed deal ends."Extract from CAB press release
Back in February we highlighted some interesting experiments that BT Consumer was carrying out on the public, with the out of contract price being made clearer and we presume this is ideally what Citizens Advice would like to see more of. Of course there is nothing to guarantee that the out of contract price when you sign up, will be the out of contract price once your minimum term is over, and we don't believe any broadband provider has sold a fixed price for your lifetime package. TalkTalk is trying to corner the fixed price market, but their prices are only fixed for the term of contract, and after a few years of broadband and line rental going up in price the hundreds of thousands who re-contracted now run the risk of over paying, since if recent Ofcom proposed wholesale price cuts have the full effect TalkTalk may have a bigger profit margin on those customers (fixed price utility contracts that only guard against price rises, but pass on price cuts are not impossible, but are very rare we believe).
The free market has reacted to a number of measures that improve things for the consumer in the last year, but some of this has not always been positive, e.g. rolling in the various up-front costs into a single price, has seen delivery costs of £6.99 magically become a set-up cost of £9.99, and migration between VDSL2 ('fibre') packages is being discouraged with set-up costs of £30 to £60 that apply no matter whether migrating between VDSL2 services or are upgrading from ADSL2+.
We fully expect average broadband speeds to become a requirement in adverts in 2017, and how this is handled may have an impact as it may discourage people from switching, particularly where they are getting above the average speed now and people worry unnecessarily that their speeds will drop even though the underlying technology and wholesale product is identical. There is also the concern that people who would benefit from VDSL2 but not get superfast speeds may be refused service (example: currently 1.5 Mbps ADSL with 12 Mbps VDSL estimate), or pushed towards a product that is less attractive price wise e.g. none of the offers and with less advertising does not feature in the average speeds of the adverts.
One idea for homes with a shared wall calendar is to highlight the end of minimum contract date for your various utilities so that you don't forget to check what the best offers are, and if your household has gone full digital set a calendar reminder so you get notified a couple of weeks ahead of the end of the contract. Broadband which works reliably quickly becomes invisible, so while those having problems will be ready to jump ship to another provider as soon as possible for those where it just works it is all to easy to forget about it.
Retention deals are still available but changes to the migration system meant that while providers used to have an ideal time to offer you a deal when you phoned up to request a migration code now you must explicitly contact the provider to see what they can offer. There is no guarantee of existing providers offering a better price, but some operators will let you sign another 12/18/24 month contract in return for a price that is somewhere between the standard price and current new customer offers.