Broadband customers £53 million worse off following regulations, report claims
- New broadband advertising rules are putting over a third of customers (38%) off switching their broadband, costing UK billpayers almost £53 million in savings
- These rules were introduced by the Advertising Standards Agency because broadband suppliers were found to be misleading customers on mid-contract price rises
- Broadband Genie is calling on providers and Ofcom to banish mid-contract prices outright and work harder to introduce faster switching powers with One Touch Switch
Broadband bill payers are heading towards being £53million worse off this year following a drop of more than a third (38%) in switches, analysis by Broadband Genie has found.
New advertising rules introduced by the ASA in mid-December could be the cause. Since they were implemented on 15 December 2023, broadband providers and comparison sites must disclose if a provider has a clause in its terms and conditions stating it may raise the price midway through a customer’s contract
Many of the widely available providers such as EE, TalkTalk or Virgin Media include clauses in their contracts that allow them to raise the price of customer’s contracts on an annual basis, usually based on inflation plus an additional percentage.
Mid-contract price rises aren’t new, but they came under the spotlight in April 2023, where, because of high inflation rates, broadband customers were hit with hefty price rises of over 14%
The ASA stepped in to help inform shoppers that a contract will likely increase. However, the rules have had an adverse effect across the broadband market and discouraged hundreds of thousands from switching their broadband deal, leaving them worse off than before.
Ofcom is currently consulting on changes to mid-contract price rises and will publish the result in the spring, with changes coming into effect four months after.
BT has recently moved away from using the Consumer Price Index (CPI) and will start displaying price increases in ‘pound and pence’, with broadband customers paying an additional £3 a month (£36 a year). However, their ‘pound and pence’ campaign leaves customers worse off than using inflation figures.
There are already many providers, including Cuckoo, Hyperoptic, Zen Internet and others that are leading the way and committing to not raising prices for customers mid-way through a contract.
Tommy Toner, Chief Experience Officer at internet service provider Cuckoo, comments:
“It comes as no surprise people are worried about switching broadband. For too long the likes of EE, TalkTalk and Virgin Media have posted huge profits off the back of sneaky price rises which have left people upset and out of pocket.
“At Cuckoo, we value our customers. People deserve to be treated fairly, which is why we don’t increase our prices mid-contract. Pricing should be fixed for the duration of the contract, and mid-contract price rises are one of the broadband industry’s dirtiest tricks.”
Adds Alex Tofts, broadband expert at Broadband Genie:
Switching is an important part of the broadband market and for years, the larger providers have got away with burying price rise information into the small print of contracts.
“Customers need prices to be crystal clear. The ASA intended to reduce the confusion that bill payers experience when they see a jump in their contract, but sadly it’s had the knock-on effect of scaring customers off trying to save money.
“Our analysis indicates that the new rules are a clear deterrent for shoppers looking to switch their deal.
“While we fully support Ofcom’s efforts to curb inflation-linked price hikes, the only solution is to ban mid-contract price rises outright. If smaller providers such as Hyperoptic and Cuckoo can afford to commit no price rises, there is no reason why the larger providers shouldn’t follow suit.”
