The UK telecoms regulator has been increasingly taking a hardline approach against legacy practices that are to the detriment of mobile phone users. Now, Ofcom has introduced more rules to protect out-of-contract customers from being overcharged by operators.
The telecoms industry has been forced to review its legacy practices after the UK regulator has taken a no-nonsense approach. In a new piece of research, the regulator found that out-of-contract (beyond their minimum contract period) mobile phone subscribers end up paying £11 more per month than if they were offered a better and cheaper alternative such as a SIM-only deal. It is estimated that telcos have made up to £182 million a year through overcharging the 2 million out-of-contract users.
In its detailed official statement
, the regulator has noted that while more customers are moving to SIM-only deals or separate contracts for handset and airtime, bundled contracts remain an attractive way for customers to acquire a handset. The regulator has now instituted new measures that will stop such customers from being treated unfairly.
points out, the new measures focus on three key areas:
Increased transparency of bundled contracts
– Operators will now need to inform customers about the cost of individual elements of bundled contracts, such as the handset, airtime and other services.
Time limit on split contracts
– Many customers are tied into long-term split contracts that stop them from switching their service providers. The new rules will bring a 24-month limit to split contracts. Ofcom is trying to bring in this rule before December 2020.
Addressing the cost of confusion among customers
– Mobile phone users will now need to be told when their contract is coming to an end and also be shown the best deals available, including SIM-only plans. These requirements are being brought into force by February 2020.
Large mobile operators have already made commitments to reduce bills for out-of-contract customers. For instance, Virgin Mobile and O2 will move their out-of-contract customers to 30-day SIM-only and 30-day airtime-only deals respectively. On the other hand, EE, Tesco and Vodafone have all decided to drop prices for their out-of-contract customers but the level of reduction will vary between each provider. The regulator expects that it should help tackle the overpayment issue for 80% of the affected customers. Although, interestingly, Three has decided not to apply any discounts for its out-of-contract customers.
Incidentally, Ofcom recently introduced new rules that allow customers to initiate switching operators with a simple text message
. The telecoms industry is perhaps among the few industries where regulators are more in-tune with the requirements of customers than the businesses themselves. The takeaway is simple – loyalty cannot be forced by imposing restrictive contracts, withholding information or making it tougher for customers to switch operators. It needs to be earned by delivering a customer-first experience!