Stopping the sneaky ‘out of contract’ broadband sting
Having saved the UK more than £500m in lower energy bills since we were founded, we’re now shaking up the broadband market. And there are worrying similarities, with millions of households paying hundreds of pounds more for their broadband, thanks to higher ‘out of contract’ charges that are not being properly explained.
Our research found that there are 15 million homes in the UK who are paying an average of £113 a year more for their broadband since their introductory deals have expired and they are now paying higher ‘out of contract’ fees.
That means £1.7bn is being wasted UK wide.
One of the main reasons for this is the lack of communication that some of the biggest broadband providers give to their customers. There is no legal requirement for providers to alert you once your initial contract price ends and your monthly payments go up. That means millions are unaware that their price has gone up, or that they are able to switch for free.
72% of all homes with broadband are paying more than they need
15 million homes are overpaying
The average difference between teaser rates and out of contract rates is £113 a year
Only 10% of broadband bill payers could recall having been alerted to their new rates
92% supported making it mandatory for providers to alert you when the contract term is up
The good news is that Ofcom, the broadband regulator, is currently consulting on whether there should be more communication. We have written to Ofcom urging them to force providers to be more transparent, and our campaign has attracted some great support.
Sarah Willingham is a consumer champion and ex BBC ‘Dragon’. She said:
It’s appalling that millions of families in the UK are being ripped off by their broadband supplier. We have already learnt that loyalty doesn’t pay in energy and it’s shocking to see the same thing happening in broadband.
The big providers have been let off easily for far too long. Reminding customers that their contract is coming to an end shouldn’t be too much effort for providers and can help many people save hundreds of pounds.
I strongly support First Utility’s decision for no out of contract price hike. Its determination to help customers cut overspending on broadband is something I hope Ofcom will take into account in its consultation to make the telecoms sector fairer for customers.
Grant Shapps MP, Chair of the cross-party British Infrastructure Group, commented:
It’s outrageous that so many people are paying more than they have to for broadband. Providers should be more transparent about their pricing changes and not prey on customer apathy. Other industries have cottoned on to the fact that consumer reminders help to drive engagement, and it’s time the broadband industry followed suit.
Here’s how the UK broadband overspend breaks down:
Check out how your town or county ranksFind out more
First Utility offers some of the cheapest broadband deals in the country with NO out of contract price increase.Find out more
I saved £240 a year by switching
Ray Dowbiggin, 73, lives with his wife in North Somerset and has been a First Utility energy customer for seven years. He decided to switch to First Utility Broadband as well, having been with BT for four years, and saved about £240 a year.
Mr Dowbiggin said "I've had a pleasant experience with First Utility as my energy supplier. I haven't had any issues and their customer service has been great. When I received an email from them to say that they were now offering broadband, I had no doubt in my mind that they'd be able to offer as good a service as they had done with my energy."
Ray had been with BT for four years, during which time his prices had increased. Thinking that his loyalty would be rewarded, Mr Dowbiggin rang BT to see whether he could be offered a better deal and to question the price rises only to be told that there was nothing that could be done to lower his broadband costs.
"After hearing this, I rang First Utility and switched my broadband and I'm glad I did so. I'm now paying less than what BT said was their cheapest offer and I'm saving nearly £20 a month. It’s also great to know that there will be no ‘out of contract’ price increase once the initial contract term is over."
All you need to know about switching broadband provider:
It is easy to do
- Most switches will be handled by the new provider. If you’re switching to and from a provider on the BT openreach network - everyone bar Virgin - then your new provider will handle it all.
- If you are switching to/from Virgin then you’ll need to alert your old provider that you’re leaving and let your new provider know you’re joining.
- Just let them know and they’ll keep you posted on the switch process and the day you’ll change over.
You typically won’t be without internet for long
- You normally won’t be without internet for more than a few hours.
You won’t normally need an engineer to come out to your home
- You typically won’t need an engineer to come to the house unless you need a new line installed such as a new build home.
You may be able to switch mid-contract if your provider puts its prices up - Like Virgin Media just has
- You can, but there may be a termination fee. The closer you are to the end of your contract the lower this will normally be.
- If your provider has put up its prices during the contract term, then you are entitled to leave with no termination fee.
- Virgin Media just announced price increases of up to £3.99 a month. This is the second increase in 9 months. If you are impacted they will write to you and you can cancel with no termination charge within 30 days of the letter.