Watchdog plans purge of rip-off rates for loyal broadband customers

New subscribers get deals on average £13-£15 cheaper each month, according to TalkTalk

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.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

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.”


Mark Sweney

The GuardianTramp

Related Content

Article image
Plusnet fined £880,000 for charging more than 1,000 ex-customers
Ofcom tells BT-owned broadband and landline provider there can be no excuses for charging users after they cancelled

Mark Sweney

22, Mar, 2017 @2:35 PM

Article image
Broadband users in line for millions in Ofcom compensation plan
Telecoms watchdog proposes making providers pay automatic compensation for 7.2m customer service failings each year

Mark Sweney

24, Mar, 2017 @9:31 AM

Article image
Telecoms firms investigated for failing to warn UK customers of price rises
Ofcom inquiry follows complaints over lack of information on annual mid-contract price rises

Mark Sweney

01, Dec, 2022 @12:17 PM

Article image
Broadband shakeup to let customers with slow speeds leave contract early
Ofcom toughens up industry code of practice, which will benefit subscribers who are not getting the minimum speed promised when they signed up

Miles Brignall

11, Jun, 2015 @12:15 PM

Article image
George Soros-backed firm unveils superfast broadband rollout in UK
Up to 50 towns and cities to enjoy gigabit-speed fibre-optic service in Hyperoptic’s £250m investment

Mark Sweney

03, Aug, 2018 @8:59 AM

Article image
Broadband users could see bills slashed as BT is forced to cut charges
Cost of superfast broadband could fall as Ofcom says Openreach should cut the wholesale prices it charges rival providers

Mark Sweney

31, Mar, 2017 @8:07 AM

Article image
Ofcom opens a road to faster broadband
Telecoms regulator puts pressure on BT to open up its network infrastructure, allowing rivals to lay their own ultrafast fibre-optic lines

Harriet Meyer and Rob Davies

28, Feb, 2016 @7:00 AM

Article image
BT to spend £6bn on superfast broadband and 4G rollout
At least 10m homes and firms to get ultrafast broadband as BT hires 1,000 new engineers and pledges improved service

Julia Kollewe

05, May, 2016 @8:58 AM

Article image
Nine ways to boost your broadband speed during lockdown
It can be infuriating when everyone is using the same wifi. Here’s what you can do to make your internet faster

Rupert Jones

11, Apr, 2020 @6:00 AM

Article image
Mobile users able to quit 'fixed' contracts if prices rise mid-term
Mobile and broadband customers whose 'fixed-rate' contracts go up in price can walk away, after Ofcom unveils new rules

Harriet Meyer

23, Jan, 2014 @12:03 PM