The UK media regulator, Ofcom, is to crack down on broadband providers who rip off loyal customers by offering better deals to new subscribers.
The regulator is aiming to tackle a so-called “loyalty penalty” whereby long-standing customers are effectively penalised for sticking with their contracts. TalkTalk estimates that on average, across the market, existing customers pay £13 to £15 more each month than new customers, as much as £180 a year.
“We’re concerned that many loyal broadband customers aren’t getting the best deal they could,” said Sharon White, the chief executive of Ofcom. “So we’re reviewing broadband pricing practices and ensuring customers get clear, accurate information from their provider about the best deals they offer.”
The regulator said that under new rules, broadband companies – as well as mobile, landline and pay-TV providers – must alert customers about the best deal or “tariff” they can offer. They must do so when any discounted deal that customers are on is coming to an end, and also every year for longstanding customers.
Ofcom has also launched a review of pricing practices in the broadband market.
“We are concerned some customers are paying more than others for similar or worse services, particularly when introductory offers have passed,” said Ofcom.
“For example, we estimate that customers who take a landline and broadband service together are paying an average of 19% more once their discounted deal has expired.”
Ofcom also found that half of British households could switch to faster broadband if they wanted. About 94% of UK homes and offices can get superfast broadband, but less than half have chosen to do so.
Ofcom reckons that 4m households with old-style, basic broadband are out of contract and could switch to superfast services for the same amount as they pay now, or even slightly less.
To raise awareness, Ofcom is launching an information campaign, Boost Your Broadband, fronted by consumer champion Gloria Hunniford. It includes a website to tell people what broadband they can get in their area, and offers impartial advice on how to find the best deal.
“We welcome Ofcom action to stop providers penalising loyalty,” said Tristia Harrison, the chief executive of TalkTalk. “In two years, we have lowered the gap between what new and existing customers pay to just £1-2 per month, whilst the average gap in the rest of the market has grown to £13-15.
She added: “If the market won’t follow TalkTalk’s lead voluntarily, it might be time for regulation that enforces fairer pricing.”
