Ofcom to "consult" on broadband contract price hikes
By Barry Collins
Posted on 18 Oct 2012 at 09:32
Ofcom will launch a consultation into the practice of hitting consumers with unexpected price hikes on fixed-term broadband or telecoms contracts.
The regulator began a review into the practice earlier this year, after it received more than 1,600 complaints from consumers and evidence from consumer watchdog Which?.
The regulator found that "many" consumers were unaware that ISPs and networks could raise the price of fixed-term contracts midway through their deals. Ofcom said that some consumers believe that communications providers should be banned from raising prices for the duration of the contract, or allow them to cancel the contract without penalty if they do.
We look at the magnitude of the price rise and the number of consumer complaints
Existing Ofcom regulations state that "communications providers are required to give customers a minimum of one month's notice of any change to their contractual terms that is likely to be of material detriment and customers must be able to withdraw from their contract penalty-free following such".
Yet, an Ofcom spokesperson told PC Pro that a price increase isn't necessarily deemed to be of "material detriment" by the regulator.
The spokesperson cited the case of Orange, which was allowed to raise the price of its contracts in line with inflation, with the full consent of Ofcom. However, when Sky implemented an 18% price increase on one of its contract packages, the company voluntarily released customers without penalty.
"We look at the magnitude of the price rise and the number of consumer complaints," the spokesperson told PC Pro.
The consultation will attempt to clarify the regulator's position on mid-term price increases. "Ofcom understands the frustration that consumers feel when faced with price rises in what they assume to be a fixed contract with a fixed price," said consumer group director Claudio Pollack.
"Having considered the large number of consumer complaints, we will soon consult on ways to address consumer concerns and ensure they are being treated fairly in this area."
Ofcom aims to publish the consultation by the end of the year.
The first time my Three price rose with inflation I blew off pointless hot air on my blog, and now I learn I should have complained for my opinion to have made any difference. Now I've had similar price rises again from Three and from Orange I still don't feel any better about the whole thing.
Anyway, we're coming into an age where being able to opt out of broadband contracts will benefit consumers because the DEAct three strikes ridiculousness means people will want to move to smaller providers and show their disdain for service providers who are complicit with the RIAA/MPAA.
By revsorg on 18 Oct 2012
Only last week
I recieved a letter from BT saying my monthly payments would go up by £0.50 fair enough, but I only took out the contract 1 month ago! You would think there would at least be a ban on increases in the first 6 months or whatever.
By JStairmand on 18 Oct 2012
Perhaps Ofcom should define "material detriment". I would have thought annual increases related to an inflation rate would be a sensible starting point.
By halsteadk on 18 Oct 2012
Why not make a fixed term price mean exactly what it syas.
If I sign up to and agree to a fixed term broadband package at an agreed price then as it claims to be a fixed term contract then the price also should be a fixed price for the duration of the contract other wise the contract is not worth the paper it is written on.
What is so hard on Ofcom to ensure this so.
By curiousclive on 18 Oct 2012
one way street
There's no place for that "material detriment" wriggle room. There's a basic issue of fairness - if I'm contractually bound to maintain my payments for the duration of the agreement then so should the other party be. It's funny isn't it that it seems to take regulation to make these companies behave as if they are in a competitive market, but that regulation seems largely to have come from the European Commission. Ofcom seems incompetent every step of the way.
By tennyson09 on 18 Oct 2012
When Virgin Media hiked the price of my 18 month contract for phone, BB & TV after 6 months I checked the small print and noticed I could cancel my contract in such circumstances as long as I notified them within 30 days of being informed of the price rise. I phoned the call centre and cancelled without penalty, exit fee, or having to buy out the contract. Might be useful info for someone else.
By Tatmeister on 18 Oct 2012
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