Hyperoptic, the UK’s largest exclusively full fibre internet service provider, is calling for Ofcom to investigate the use of above-inflation mid-contract price rises being implemented by many major broadband providers. Hyperoptic has written to Ofcom to request an investigation into this industry practice and to consider reform that would allow impacted customers to terminate their agreement and switch providers, penalty-free.
Current Ofcom rules require providers to offer customers the right to exit their contract, penalty-free, if they surprise them with mid contract price rises. However, most broadband providers (BT, EE, Plusnet, Vodafone, O2, TalkTalk, Shell Energy, Sky etc.) avoid this by adding details of an annual price rise into the ‘small print’ of their customer contract.
This can lock customers into a contract where they end up paying significantly more than the initial advertised price they signed up for.
With inflation running at a thirty-year high, this has led to some customers facing a hike of almost 10%.
Under Ofcom General Condition C1 (1.14-1.17), any price variation clause must be sufficiently prominent and transparent at the time of purchase, so that the customer can be informed of their contract working in this way.
Yet in a nationally representative study of 2,000+ consumers, 60 per cent of the respondents stated that they were not aware that the price of their broadband would increase during their contract. Half (47 per cent) felt misled by their broadband provider, and half (48 per cent) would not have signed their contract if they had been aware.
These results indicate that the requirements of Ofcom General Condition C1 (1.14-1.17) requirements are not being met.
James Fredrickson, Director of Policy, and Regulatory Affairs, Hyperoptic: “Households are already hurting from inflationary pressure on core products like food, petrol and energy. It is then startling to see that the majority of broadband customers are unaware of being locked into price rises of this scale.
“It is imperative that Ofcom, as our industry regulator, urgently investigates industry compliance with the rules governing price variation clauses. As part of that, Ofcom should also consider making these price increases far more visible to customers – with a view to ultimately giving them the right to leave their agreement without charge should they feel that they could get a better deal elsewhere.”
So far, Ofcom has commented to advise “companies do need to invest in their networks, but this is a difficult time for many people to deal with price rises. Under our rules, providers must set out price rises clearly before customers sign up and cannot just include them in the small print.”
Hyperoptic has also launched a petition that calls for freedom for consumers to switch broadband providers – penalty-free – whenever they are faced with an unfair price hike. It will be sharing these signatures with Ofcom as evidence of consumer sentiment: https://www.hyperoptic.com/free-to-switch