Following an Ofcom review of broadband pricing, a bunch of British ISPs have promised to allow loyal customers access to better deals once their contracts end.
The regulator found 40 per cent of broadband customers are currently "out of contract", while punters who sign a new deal with their provider could typically pay £8 to £9 less per month than customers who don't.
Ofcom voiced concern that vulnerable people may be paying more than they need to – because they lack the confidence to navigate the market or talk to their provider.
"As a result of our review," Ofcom said, "a number of ISPs have made a range of commitments to provide access to fairer pricing. The measures are voluntary, as existing laws do not allow Ofcom to cap prices in general."
Most of these commitments will come into effect by March 2020. They include:
- BT, Sky and TalkTalk will allow their out-of-contract customers to get the same deals as new customers, when they take out a new contract.
- The difference that any of Sky's newly contracted customers will pay when their contract expires is no more than £5 per month. From February, BT will cap the difference that existing in-contract customers pay when their contracts expire – it will confirm the amount of this cap in due course.
- BT customers without access to superfast broadband will no longer pay more than entry-level superfast customers. And BT will provide a one-off automatic price reduction for vulnerable customers who are currently out of contract on more expensive deals.
- TalkTalk and Virgin Media will carry out annual price reviews with their vulnerable customers to ensure they are on the best deal for their needs, providing automatic discounts where appropriate if customers do not respond.
- BT, EE, Plusnet and TalkTalk will protect out-of-contract customers from above-inflation price rises.
From February, broadband customers must also be told when their contract is coming to an end, and shown the best deals available. People who choose to stay with their provider without signing up to a new contract will be given details of its best deals every year.
In July, Ofcom extracted a similar range of promises from mobile operators regarding out-of-contract customers.
Lindsey Fussell, Ofcom's consumer group director, said: "Broadband customers who are out of contract can make big savings – around £100 a year on average – by picking up the phone to their current provider and signing up to a better deal.
"And in future, everyone will be told about the best tariff on offer. Thanks to the commitments we've secured from major broadband firms, many customers – including the most vulnerable – will pay less."
However, the Citizens Advice remained lukewarm about the plans. Last year, the charity launched a "super-complaint", calling on the Competition and Markets Authority to intervene when loyal customers are charged more for staying with providers.
Citizens Advice chief exec Gillian Guy said: "Our super-complaint, submitted a year ago, found that loyal broadband customers lose over £1bn a year. Ofcom has today confirmed that finding.
"The fact that 43 per cent of all vulnerable customers are out-of-contract means that Ofcom needs to tackle this problem urgently.
"While we welcome today's announcement, it's unlikely that voluntary, piecemeal commitments from providers will address the sheer scale of the challenge we've identified.
"It's vital that we see stronger, faster action in the broadband market before the Competition and Markets Authority report back in December on progress since our super-complaint. If this fails to happen, we expect them to conduct a market study to ensure loyal customers can get a fair deal once and for all." ®