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Ofcom – Price Rises in Fixed-Term Contracts

Ofcom has published a statement on how it will protect consumers from mid-contract price rises for fixed-term landline, broadband, and mobile services.

Following a consultation, Ofcom has decided that consumers and small businesses should be allowed to exit a fixed-term contract without penalty if their communications provider increases the cost of their monthly subscription price deal.

The statement contains new guidance for communications providers on one of the ‘general conditions’ with which they must comply – GC 9.6 – which tells them how to interpret and apply current telecoms sector rules in relation to price increases during fixed-term contracts.

This guidance sets out that:

Ofcom is likely to regard any increase to the recurring monthly subscription charge in a fixed-term contract as ‘materially detrimental’ to consumers. Providers should therefore:

1 – Give consumers at least 30 days’ notice of any such price rise and allow them to exit their contract without penalty.

2 – Any changes to contract terms, pricing or otherwise, must be communicated clearly and transparently to consumers.

The new guidance comes into effect three months from today (Oct. 25, 2013).

It will apply to any new landline, broadband, and mobile contracts (including in some cases bundled contracts) entered into after this date. We think this is generally good news for the consumer because it will protect them from ad hoc and sudden price increases which could affect their monthly outgoings.

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