Insights

End of contract notice proposed by Ofcom

BILLMONITOR | SEPTEMBER 11, 2018

The continued campaign for telecoms transparency took another positive step recently with new rules proposed by Ofcom.  

Designed to enable consumers to better utilise the wide choice of communication services available and ensure they are getting the best deals, the new rules being proposed stipulate that customers of landline, broadband, TV and mobile services must be told when they are approaching the end of their minimum contract period.

Why is this such a crucial step?

According to the consultation document released by Ofcom at the end of July 2018, 15% of mobile phone customers do not know or are confused about their contract status.  Interestingly, around a quarter of people who don’t know when their contract ends also don’t know what will happen to the price they pay when it does. This is a situation that is not unique to mobile phones users.

Further, one quarter of customers on a mobile handset contract are unaware of the possibility of moving to a SIM-only deal, which could save the customer hundreds of pounds once they reach the end of their contract, and thus the end of their handset payment plan.

For example, moving from a mobile tariff that includes an iPhone 8 and an airtime package with 4 GB data, unlimited minutes and texts for approximately £33/month to the same airtime package on a SIM only plan for about £10/month would result in annual savings of £276. The customer will also have additional flexibility to be able to upgrade as and when a new handset is required if they select a monthly rolling or 12-month contract.

Contract end notification

Billmonitor recently reviewed the approach taken by selected mobile phone operators in respect of separating out the cost of the handset purchase from the airtime in consumer bills. The findings showed that of the large incumbent providers, including EE, Vodafone and O2, none offer the price separation as standard (although O2 offers the O2 Refresh tariff that separates the costs and thus automatically reduce the monthly bill once the handset has been paid off).

Billmonitor found more transparency with Tesco Mobile, GiffGaff and also Virgin Media – allowing customers to fully understand how much they pay for their handset and when this payment will stop.

Billmonitor MD Klaus Henke points out that:

Billmonitor always informs its users when their mobile phone contract is coming to an end, ever since this feature was added to our Billmonitor analysis in 2012!

The landscape is still far from optimal. However, new regulations like the ones being advanced by Ofcom, combined with greater consumer awareness and third-party vigilance means that progress is being made towards a fairer, more transparent consumer telecoms market.

Read about the new rules from Ofcom here and you can access the main documents and respond to the consultation via the Ofcom website here.


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See you soon,

Billmonitor team