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Don't sleep walk into broadband price rises
Tuesday 11 April 2017 09:34:24 by Andrew Ferguson

Given the amount of advertising around broadband switching and broadband offers one would hope that everyone is keeping an eye on what they are actually paying, rather than blindly assuming their provider will automatically switch them to the cheapest tariff. Unfortunately a cautionary note from Citizens Advice suggests that 35% don't realise that they may be met with price hikes after their initial deal ends.

"A new report from the national charity reveals that more than a third (35%) of broadband customers don’t realise they could face price hikes by staying on the same contract with their provider after their initial deal ends.

With broadband customers staying on the same contract for 4 years on average, Citizens Advice warns customers are being charged a ‘loyalty penalty’ for remaining on the same deal.

Citizens Advice wants broadband providers to help customers avoid loyalty penalties by being much clearer about how much their services will cost after the initial fixed deal ends."

Extract from CAB press release

Back in February we highlighted some interesting experiments that BT Consumer was carrying out on the public, with the out of contract price being made clearer and we presume this is ideally what Citizens Advice would like to see more of. Of course there is nothing to guarantee that the out of contract price when you sign up, will be the out of contract price once your minimum term is over, and we don't believe any broadband provider has sold a fixed price for your lifetime package. TalkTalk is trying to corner the fixed price market, but their prices are only fixed for the term of contract, and after a few years of broadband and line rental going up in price the hundreds of thousands who re-contracted now run the risk of over paying, since if recent Ofcom proposed wholesale price cuts have the full effect TalkTalk may have a bigger profit margin on those customers (fixed price utility contracts that only guard against price rises, but pass on price cuts are not impossible, but are very rare we believe).

The free market has reacted to a number of measures that improve things for the consumer in the last year, but some of this has not always been positive, e.g. rolling in the various up-front costs into a single price, has seen delivery costs of £6.99 magically become a set-up cost of £9.99, and migration between VDSL2 ('fibre') packages is being discouraged with set-up costs of £30 to £60 that apply no matter whether migrating between VDSL2 services or are upgrading from ADSL2+.

We fully expect average broadband speeds to become a requirement in adverts in 2017, and how this is handled may have an impact as it may discourage people from switching, particularly where they are getting above the average speed now and people worry unnecessarily that their speeds will drop even though the underlying technology and wholesale product is identical. There is also the concern that people who would benefit from VDSL2 but not get superfast speeds may be refused service (example: currently 1.5 Mbps ADSL with 12 Mbps VDSL estimate), or pushed towards a product that is less attractive price wise e.g. none of the offers and with less advertising does not feature in the average speeds of the adverts.

One idea for homes with a shared wall calendar is to highlight the end of minimum contract date for your various utilities so that you don't forget to check what the best offers are, and if your household has gone full digital set a calendar reminder so you get notified a couple of weeks ahead of the end of the contract. Broadband which works reliably quickly becomes invisible, so while those having problems will be ready to jump ship to another provider as soon as possible for those where it just works it is all to easy to forget about it.

Retention deals are still available but changes to the migration system meant that while providers used to have an ideal time to offer you a deal when you phoned up to request a migration code now you must explicitly contact the provider to see what they can offer. There is no guarantee of existing providers offering a better price, but some operators will let you sign another 12/18/24 month contract in return for a price that is somewhere between the standard price and current new customer offers.

Comments

Posted by 21again 16 days ago
> Retention deals are still available but changes to the migration system meant that while providers used to have an ideal time to offer you a deal when you phoned up to request a migration code now you must explicitly contract the provider to see what they can offer.
Posted by jelv 16 days ago
"Of course there is nothing to guarantee that the out of contract price when you sign up, will be the out of contract price once your minimum term is over, and we don't believe any broadband provider has sold a fixed price for your lifetime package."

Plusnet fixes the price for after the minimum term when you sign up. If there is an increase you get the option to leave penalty free as the increase will affect both the in contract price and the price after the minimum period. (Plusnet implement it as a fixed lifetime price with a fixed discount for the initial minimum period).
Posted by 21again 16 days ago
My current ISP has usually offered a very good BB retention deal over the last few years providing I have line rental with them however this time the offer although discounted was not so good i.e. cheaper to move to BT with offers and cashback etc, however I stayed with my ISP mainly due to the fact that no refunds available on LRS.
Posted by Kr1s69 15 days ago
Ofcom should fix the basic costs like migration, activation and perhaps even router delivery.

Then the rest should be left to the ISP. If people don't take enough interest in getting a good price that's their own fault.
Posted by zyborg47 15 days ago
changing to another network you save very little unless you are going from BT who are over priced. I do not want to be in contract at the moment which is why I am staying as I am.
Posted by professor973 15 days ago
Talktalk are now fixing price for the length of contract. https://www.talktalk.co.uk/shop/broadband/mk/?portalid=ppc-brand_generic&utm_medium=ppc&utm_campaign=broadbandna&utm_source=google&ds_kids=43700009234785423&gclid=CI37_8_EndMCFUU6GwodkR8Omg
Posted by zyborg47 15 days ago
Yes, so someone from talk Talk in town yesterday tried to tell me, they seemed to be in out city centre a lot these days, but they do not like being told I am not interested. so I walked off shouting I would not touch Talk Talk with a bargepole.
Posted by andrew (Favicon staff member) 15 days ago
TalkTalk was mentioned in the article, but the proposed slashing of wholesale prices may well end up upsetting those customers, who thought that prices would keep rising.
Posted by mike41 15 days ago
"highlight the end of minimum contract date for your various utilities so that you don't forget to check what the best offers are ..."

Couldn't agree more. Loyal customers are top of the list of those being ripped off, so set renewal reminders for EVERYTHING: car and home insurance, especially as these companies will renew automatically 'to save you inconvenience' and sneak in a 50% premium increase; broadband and TV contracts; electricity and gas.
Posted by zyborg47 14 days ago
@mike41, sounds all good, but you change to a different network or supplier and then they put their prices up so no better off. Been there with energy companies, so stay where I am now.
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