TechnologyTelecommunications

UK broadband users to save £270m after Ofcom price review

Millions of customers are in line to share in savings of more than £270m a year on the cost of their broadband bills, after Ofcom reached agreement with companies on pricing changes and commitments to offer better deals when consumers’ contracts come to an end.

A report released by the telecoms and media regulator found that about 40% of UK broadband customers, 8.7 million, are out of contract and most of them are paying higher prices than they could be if they struck a new deal or changed providers. On average, these customers are paying about £4.70 a month more than their provider’s average price.

The report found that Virgin (61%), Sky (42%) and Plusnet (42%) have the highest proportion of customers out of contract. However, EE and TalkTalk broadband customers who are out of contract pay the highest amount more a month than other customers at their provider, at £7.90 and £6.90 respectively.

“We’ve already made it easier for people to get a discount and save money,” said Jane Rumble, the Ofcom director of consumer policy, referring to new rules introduced in February forcing firms to notify all customers of better deals when their contract expires. “But we’re concerned some customers who find it harder to seek better deals are missing out.”

Last year, Ofcom secured commitments from BT, TalkTalk and Virgin Media to automatically reduce prices for vulnerable customers who are out of contract.

EE, Plusnet and Sky have agreed to do the same. In addition, EE and Plusnet have joined BT, Sky and TalkTalk in agreeing to give all existing customers access to discount prices they offer to new customers.

“It’s good to see the regulator working with providers to reduce the alarmingly large number of customers paying high prices when out of contract,” said Natalie Hitchens, the head of home products and services at Which? “Our research has shown these people could be paying hundreds of pounds a year more than they need to.”

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Ofcom says that the changes could mean that about 1 million vulnerable customers who are out of contract could save about £70 per year.

“We know from the complaints we handle that consumers want pricing that’s fair, open and transparent across the board, so they can make informed choices,” said Ed Dodman, the director of regulatory affairs at Ombudsman Services, the telecoms complaints handling body. “Today’s announcement marks a positive step towards that and will help to build consumer trust in the broadband market.”

Last week, Ofcom ordered phone, broadband and pay-TV companies to stop threatening to disconnect vulnerable customers struggling to pay their bills during the coronavirus pandemic.