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Thursday, January 3, 2013

Ofcom launches consultation about price rises during mobile, landline and broadband contracts

Wants networks to let customers leave if prices increase during an initial contract term

Ofcom has announced a consultation about protecting consumers from price rises during fixed-term contracts for landline, broadband and mobile phone services. It first revealed plans for the consultation in October last year.

The regulator is asking consumers, retailers and network operators to express an opinion about a number of possible options. One choice - the option preferred by Ofcom - would let consumers end a mobile, fixed-line phone or broadband contract without penalty if their service provider introduced any price increase during the initial fixed term of the contract.

Other options include making the potential for price increases much clearer, providing formal Ofcom guidance about price increases, requiring consumers to ‘opt-in’ to any variable price contract or maintaining the current situation.

Current rules allow communications providers to increase prices during a fixed-term contract but do not allow consumers to leave without penalty unless the price increase is likely to cause any ‘material detriment’. This phrase has been interpreted differently by various telecoms providers.

Claudio Pollack, Ofcom’s Consumer Group Director, said “Many consumers have complained to us that they are not made aware of the potential for price rises in what they believe to be fixed contracts. Ofcom is consulting on rules that we propose would give consumers a fair deal in relation to mid-contract price rises.”

The consultation closes on 14th March 2013, with a final decision expected in June 2013.

[Consultation]

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Author: The Fonecast
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