Citizens Advice warns that UK broadband customers often face a 'loyalty penalty' if they stay with their current provider after the initial contract period is over. Summing it up in financial terms, people face "an average price rise of £113 a year once their deal ends," says the UK national charity. According to research by the organisation, over a third of customers don't realise these price hikes will occur.
Keeping in mind that the average customer stays with the same broadband provider for four years, Citizens Advice has compiled the table below highlighting the 'loyalty penalty' very clearly for the big 5 providers.
|
Provider & cheapest basic broadband deal |
Monthly tariff during fixed contract period |
Monthly tariff after fixed contract period |
% increase |
Monthly difference |
The annual loyalty penalty |
The loyalty penalty over 4 years |
|
BT 12 month |
£24.49 |
£40.99 |
67% |
£16.50 |
£198.00 |
£594 |
|
Virgin Media 12 month |
£32.25 |
£32.25 |
0% |
£0.00 |
£0.00 |
£0.00 |
|
Talk Talk 24 month |
£20.00 |
£25.50 |
28% |
£5.50 |
£66.00 |
£132 |
|
Sky 12 month |
£18.99 |
£28.99 |
53% |
£10.00 |
£120.00 |
£360 |
|
EE 18 month |
£21.00 |
£28.50 |
36% |
£7.50 |
£90.00 |
£225 |
You can see above that BT is the most aggressive player - in maximising its income from an introductory pricing bait-and-switch technique. Customers that stay loyal to BT, after an introductory low-price offer, face an eye-watering 67 per cent price increase. With provider switching inertia most would let these direct debits run for about 4 years before switching to a new deal - thus paying out about £600 more for bills than they would have needed to reckons Citizens Advice.
Several fibre broadband deals on offer today - deals don't show end of contract pricing.
Previous Ofcom studies have found that older and lower income families are less likely to switch broadband and telephone providers. Citizens Advice would like Ofcom and the government to do more to pressure broadband companies to implement fairer pricing, like it has done with other home utility services.
To help people realise when their contract pricing is changing Citizens Advice suggests up-front information in advertising, not just in T&Cs, plus communications like texts when introductory pricing ends.
"Loyal broadband customers are being stung by big price rises once their fixed deal ends," asserted Gillian Guy, chief executive of Citizens Advice. "These extra costs can run into hundreds of pounds," she warned.
