New research finds
New data from First Utility Broadband shows that only 10 per cent of broadband customers have been told when their contract ends – despite an average 37 per cent price hike from most major providers after the initial contract term. That’s £113 per year, per household. This lack of transparency over contract alerts means that 72 per cent of UK households – some 15 million homes – are paying ‘out-of contract’ rates for their broadband, costing the UK £1.7bn a year more than necessary.
An investigation from First Utility Broadband also found the confusion reigns among the staff of the biggest broadband providers as to their procedure for alerting customers when their prices increase at the end of the initial contract term. During calls to the contact centres of the major providers, First Utility found that some providers:
- Admit to not alerting customers because “if the customer does nothing, it’s going to make more money for the business” according to a customer service agent.
- Take a back seat and put the onus on the customer. One customer service agent said: “it’s the customer’s responsibility to know their contract is about to end”
- Believe customers should notice the amount of money coming out of their account. One agent said “when customers notice more money coming out of their contract, that’s a sign that they’re now out of contract”
- Found reminding customers about their end of contract date as a hassle. According to one customer service agent; “it’s too much of an administrative task”
Energy providers are legally required to alert customers 49 days before the end of a contract but no such regulation exists for broadband. That is despite First Utility Broadband research showing that 92 per cent of UK households would expect their broadband supplier to alert them when their initial contract price is ending.
First Utility wants all providers to be mandated to tell customers when their contract comes to an end, just as energy suppliers are required to do. Ofcom is currently consulting on this in order to encourage consumer engagement and help customers avoid paying out of contract charges.
Ed Kamm, Chief Commercial Officer, First Utility commented: “The parallels between the energy and telecoms markets are striking, with large swathes of households paying far too much for both services. It’s clear that left to their own devices, the biggest broadband suppliers – just like the Big Six energy companies – will take any opportunity to rip customers off by hiding better deals behind bamboozling T&Cs.
“As an energy supplier, we’re obliged to let our customers know when their contract is drawing to an end. We urge the industry to consider something similar to help empower their customers and support engagement.
“Broadband is lagging behind many sectors and proving to be among the worst industries for customer communication. It’s about time it caught up and formalised the process of communicating out-of-contract plans with customers.”