Consumers can now benefit from shorter phone and broadband contracts as new regulations come into force today.

Changes to European telecoms law mean not only will providers have to offer 12-month contracts, but compensation must also be paid to those whose number is not transferred to another provider quickly.

Operators will now only be able to tie consumers into a new phone or broadband contract for a maximum of 24 months, and they must also offer 12-month contracts.

As a result, fewer customer will be tied into lengthy deals so can switch to cheaper packages earlier and benefit earlier from new technology. This means three-year deals, which have sprung up recently, are now banned.

Communications regulator Ofcom hopes shorter contracts will promote competition.

However, it says 12-month deals do not have to be available on every product and it will also be up to providers to set prices, meaning 12 month contracts could work out costlier per month.

For instance, a 16GB iPhone 4 on Vodafone on a contract with 300 monthly minutes costs £35 a month on both a 12 and 18-month deal, but the phone is £199 on the 18-month plan compared to £299 on the year-long package.

Moving your number

The new regulations also require mobile phone providers to transfer customers' phone numbers – where they want to keep the same number when switching provider – to a new operator (known as porting) within one working day. 

While this rule was implemented on 11 April for personal customers, it's now been extended to business customers.

Landline numbers must also be ported within one working day and providers must ensure consumers are protected from slamming, when a customer is switched to another provider without consent.  

If a number isn't ported within one working day, or if there is an abuse of the porting system, providers will have to provide compensation.

Ofcom has suggested the minimum payout should be based on the customer's daily line rental charge, although it will be up to individual providers to decide.