Broadband News

Ofcom consults on how end of contract notifications should work

With headlines that 10 million communication product customers are paying more than they need too as they are outside their minimum contract term and their price rose automatically at the end of term, the moves by Ofcom to introduce end of contract notifications are just a matter of time now. A consultation has opened to allow concerned parties to respond to the proposals before 9th October 2018.

Encouraging customers of telephone, broadband and mobile contracts to shop around once their minimum term comes to an end is clearly going to be popular with the large number of switching sites in the UK and those operators who are currently expanding, but conversely will not be popular with the long established brands where lots of customers have no real recall of how many years ago they joined the provider.

At the end of the minimum contract term, most broadband services switch to a simple 30 day rolling contract, so you are never truly out of contract, but there are no penalties if you decide to migrate away.

The idea is that around 40 to 70 days before the end of the existing minimum term of the contract (usually 12, 18 or 24 months long) a notification letter would be sent out indicating that their contract is coming to an end and what options people have (this will cover residential and SME with under 10 employees). Also once the rule is introduced existing customers who are outside a minimum term would get notified.

For those customers who pay by Direct Debit, the all too common price rise when you get to the end of the minimum term should be obvious since you should get a change notification for the Direct Debit amount, but it is probably the case that most people will not link that with the end of the minimum term and their ability to migrate away without penalty.

One worry with the proposed 40 to 70 day notification email/letter is that lots of people may react within a few days, and those triggering migrations during their minimum term will end up paying a few weeks of penalty payments for ending a contract early.

One quirk is that this may encourage providers to embrace fixed price contracts more, and if the pattern TalkTalk use is followed we may end up with the scenario where millions potentially remain inside their minimum term for many years.

The UK broadband market is also changing, so for VDSL2 and ADSL2+ services while people invariably have a wide choice of providers to move between and can successfully chase introductory offers and gifts for years as full fibre (FTTP) is rolled out it is looking like their will be many more looked into a single provider infrastructure network.

A final warning, on our forums the odd case of a member of the public contacting their existing provider to chase a retention deal does appear and in some cases it seems that the changes in speeds shown in the advertising is being abused in an effort to encourage customers to stay with the existing provider e.g. cases where new median speed for a product is below what customer is already getting. Whether this is just sales staff mis-understanding all the changes or the result of coaching to increase retention is a big unknown, but for those with the resources to carry out long term secret shopping tests such as Ofcom it is probably worth investigating before sending out millions of end of term notifications.

Comments

Hopefully Ofcom will look at the energy sector and mirror what they are doing with allowing customers to leave penalty free within 49-days of the end of their contract. Running a system that is different seems like it is missing a trick of simplifying things for consumers..

  • john
  • thinkbroadband staff
  • 4 months ago

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