Broadband shake-up tackles rip-off prices for loyal customers – but most could save more by switching
Some of the biggest broadband providers are set to cut costs for those loyal customers paying expensive out-of-contract prices by March 2020, under new measures announced by the telecoms regulator. Yet don't be fooled, the best deals will still be for switchers.
There are a huge 8.8 million people currently out of contract and typically paying £100/year over the odds for their broadband, according to Ofcom's latest report.
When signing up to a new broadband deal, you often pay a cheap promo rate for the length of the contract. Though stick with the provider past this and costs usually rocket, sometimes to eye-watering levels. This can mean that someone on a promo rate for fast fibre can be paying £100s/yr LESS than someone out of contract with a standard speed connection with the same provider.
To tackle this unfair pricing, Ofcom conducted a review into the industry and has this week unveiled new initiatives. These include commitments from BT and Sky to cap out-of-contract rates and to enable loyal customers to pay the same standard price as newbies. But this doesn't factor in switching incentives such as gift vouchers or bill credit – so if you're out of your minimum contract term, for the absolute best deals check now if you can save £100s a year by switching.
Compare the best deals in your area with our Broadband Unbundled tool.
What is changing?
Ofcom says broadband providers have made the following specific commitments, with most planning to put them in place by March 2020:
- BT, Sky and TalkTalk will allow existing customers to get the same deal as new customers when they sign up for a new contract. The promise only covers the monthly price, NOT any extras or rewards that new customers on introductory offers could claim.
- BT and Sky will cap the difference between its promo and out-of-contract rates. New Sky customers won't pay any more than an extra £5 per month when their contract expires and it's already amended its pricing to reflect this. From February, BT will also cap this difference, though it is yet to reveal the amount and when exactly it'll come in.
- BT customers without access to superfast broadband will no longer pay more than new superfast customers. And BT will provide a one-off automatic price reduction for vulnerable customers (such as people with learning or communication difficulties or those suffering physical or mental illness or bereavement) who are out of contract on more expensive deals.
- TalkTalk and Virgin Media say they will carry out annual price reviews with their vulnerable customers to ensure they are on the best deal for them, providing automatic discounts where appropriate if customers do not respond.
- BT, EE, Plusnet and TalkTalk have said price rises for out-of-contract customers will not be above the rate of inflation.
These measures are on top of the new Ofcom rules announced back in May that will force providers to warn customers before they're out of contract from February 2020.
What else is Ofcom consulting on?
Ofcom is looking at a number of different options to make broadband pricing 'fairer' for customers. It's currently seeking views from those in the broadband industry on a number of different initiatives. These include:
- Greater protection for vulnerable customers. Ofcom has identified that vulnerable customers – including those who may have a physical or mental health problem, or are experiencing a life-changing event such as bereavement or job loss – are often left behind and lack the confidence to switch or haggle over price. The regulator has called on providers to better identify and help these customers, and is currently consulting on a new, special tariff to protect low-income households.
- Making it simpler to switch. Ofcom is also consulting on requiring providers to take part in new trials to help people find deals. This could include the concept of collective switching, which involves securing a special deal for a large number of customers, which has been successful in helping people switch energy provider.
You need to switch regularly to bag the cheapest deals
If you want to constantly win the broadband price game, you need to be on the ball. Even though some providers will offer the 'same' deals to new and existing customers, that only applies to the monthly cost and WON'T extend to the all-important rewards, such as vouchers or cashback, which will still only be available to switchers (you'll see these deals on our Broadband Unbundled tool).
Most broadband providers bank on you not changing once your initial promotional rate ends, so follow these steps to ensure you're always on the best deal:
1. Check when your contract ends – if you leave before this date, you will usually be charged a penalty.
2. Around one month before it ends, compare the broadband deals available in your area using our Broadband Unbundled tool.
3. Switch to the best deal for you – your new provider will usually notify your existing provider and arrange a switch date.
4. Make sure you claim and activate any rewards as part of the deal.
For more, see our How to get cheap broadband guide.
Don't want to switch? Haggle with your current provider
For those who don't want to switch, the other option to cut costs if you're out of contract is to haggle.
Our latest poll showed 75% of broadband customers who tried to haggle were successful in negotiating a better deal. With some firms, the success rate was even higher – for example, 84% of Sky customers claimed victory in reducing their costs.
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