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Broadband and home phone contracts come under scrutiny with Ofcom ban on rollover contracts

Last month Ofcom announced that it will ban automatically renewable contracts (ARCs), otherwise known as rollover contracts, for landline and broadband customers and from the 31st of December 2011 onwards the sale of ARCs to residential and small business customers will be prohibited.

By on October 06, 2011 at 10:24 AM
Press
Broadband
Broadband and home phone contracts come under scrutiny with Ofcom ban on rollover contracts

Ofcom will also require communications providers to move all residential and small business customers currently on rollover contracts to alternative deals, and to completely remove rollover contracts from the market by the 31st of December 2012.

Chris Williams, Director at Ofcom accredited TV, broadband and phone comparison service Simplifydigital.com commented:

"Ofcom's intervention is very welcome. Automatically renewable contracts are absolutely not in the interests of long suffering customers who can unwittingly get tied into another long contract unless they have an accurate annual alarm clock to remind them to call up their provider at the appropriate time.

"ARCs automatically roll forward to a new minimum contract period - with penalties for leaving - unless the customer actively opts out of the renewal during a short window at the end of each contract period. So if you have a 12 months automatically renewable contract and you don't proactively call to cancel the contract before it ends, they will automatically sign you up for another 12 months."

At present, BT is the only large communications provider currently offering these contracts to residential customers and Ofcom estimates that approximately 15 per cent of UK residential consumers are on rollover contracts. Other residential providers include Adept Telecom, Axis Telecom, Eze Talk and iTalk, while TalkTalk Business, Titan Telecoms, and Optimum Calls offer ARCs to business users.

A round up of popular provider contract terms
Provider Standard Contract Terms
BT 12 months for phone line, some with automatically renewable contracts
O2 12 months or no contract option
Orange 12 months
TalkTalk 12 months
Virgin Media 18 months
Sky 12 months
Plusnet 12 months or no contract option


Plusnet and O2 both offer options involving no minimum term periods:

  • Customers who want to sign up to a Plusnet broadband and home phone deal can pay £20 or £40 for a wired or wireless router respectively and a £25 connection fee. After which customers will be able to leave at any time with 10 days notice.
  • O2 customers can pay a one-off charge of £30.63 for 30 day rolling contracts, O2 customers will have to give 30 days notice to terminate the service.

Both of these options are beneficial if the service is required for less than 6 months, particularly as both providers are regularly awarded high scores for customer service.
However if you need a broadband connection for longer than 6 months, it's probably in your interests to take the normal contract (as it may well work out cheaper despite the cost of breaking the contract). For example, O2 are currently offering 3 months free on The All Rounder and The Works for the 12 month contracts.
Three months free on the latter package means a saving of up to £85.50, plus no need to pay the £30.63 one-off activation charge for the 30 day contract package - a saving of £116.


Chris Williams continued:

"We talk to thousands of customers a week, helping them find the best value deals for them. The great majority take a 12 or 18 month contract, as these standard contract packages offer the best deals and often no up-front costs.

"So, unless you definitely need the broadband service for less than 6 months, we recommend taking a standard contract package, to benefit from the very best deals."

Simplifydigital's pick of the deals - the 4th of October 2011

Short/no contract broadband & phone deals
Provider Package Name Details Set-up/Installation Monthly Cost
Plusnet Value with Evening & Weekend Calls • No contract • Up to 20 Mb Speed • 10 GB download allowance • Free Evening & Weekend Calls to UK landlines £65 (incl wireless router) £6.49 (plus £11.99 line rental)
O2 (for O2 mobile customers) O2 The Basics with Evening and Weekend Calls • 30 day rolling contract • Up to 24 Mb Speed • 20 GB download allowance • Free Evening & Weekend Calls to UK landlines £30.63 £11.00 (plus £7.50 line rental)



The short/no contract options above from Plusnet and O2 have an almost identical monthly cost (£18.48 and £18.50 respectively). There is a larger download allowance and potentially faster speeds with the O2 package (the monthly prices above are for O2 mobile customers, non-mobile customers must pay an extra £5 per month bringing the total monthly cost for the O2 package to £23.50).

The biggest savings to be made are from taking a triple play service, which will either lock you in to a 12 or 18 month contract dependent on the provider.
The best entry level bundle deals are shown below. If you are interested in saving money then taking the BT option is the best bundle. If your broadband connection is a priority then taking a fibre optic connection from Virgin Media is ideal and finally if you're interested in a large selection of television channels then taking the bundle from Sky is the best choice.

Provider Package Name Details Set-up/
Install
Monthly Cost 1st Year Cost
(incl set-up)
BT (BEST OVERALL BUDGET TRIPLE) TV Essential + Broadband and Evening & Weekend Calls • 70 Freeview Channels,BBC iPlayer, Catch-up TV • Up to 20 Mb speed, 10 GB download allowance • Free evening & weekend calls to UK local and national numbers • 18 month contract*** £30.00 £4.00 for 4 months, £17.00 thereafter (plus £10.00 line rental)* £182.00 (£302.00 incl line rental)*
Sky (BEST BUDGET TV TRIPLE) Sky+ Entertainment Pack & Broadband Everyday Lite & Talk Freetime • Over 300 Channels, 6, HD channels, Anytime+ show library • Up to 20 Mb speed, 2GB download allowance • Free evening and weekend calls to UK local and national numbers • 12 month contract £79.95 £20.00 (plus £9.95 line rental)** £319.00 (£438.40 incl line rental)**
Virgin Media (BEST BUDGET BROADBAND TRIPLE) TV Size: M+ & Broadband Size: L & Phone Size: M • 65 Channels, 6 HD channels, BBC iPlayer, Catch-up TV • Up to 10 Mb speed, unlimited download allowance • Free weekend calls to UK local and national landlines and UK Virgin mobile numbers • 18 month contract £49.95 £20.00 (plus £13.90 line rental) £289.95 (£456.75 incl line rental)



*customers must take BT line rental saver, a £120 payment needs to be paid in advance.
**customers must take Sky Upfront line rental, a £119.40 payment needs to be paid in advance.
Information correct as of 04/10/2011

***Not an automatically renewable contract

Notes to editors:
Simplifydigital.com offers a free and impartial "Switching Support" service for anyone looking to get a digital TV, broadband or phone package.

Its London-based impartial experts are available for free over the phone, to answer all those tricky questions and match the family's needs to the best deal available.
Simplifydigital.com's experts are available for free on 0800 1 388 388 seven days a week (Lines open Mon-Fri 8am-8pm; Saturday 9am-5:30pm; Sunday 10-5:30pm).
You can also use Simplifydigital.com's Ofcom accredited comparison engine online at www.simplifydigital.com.

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