Feeds

Ofcom begins crackdown on auto-renew telco contracts

'Man, we're already totally competitive', grumbles BT

Providing a secure and efficient Helpdesk

Telcos have until the end of this year to lock landline and broadband customers into automatically renewed contracts after Ofcom kiboshed the practice.

Currently, unless a punter opts out, some ISPs including BT automatically renew such contracts, and apply penalties to small biz and residential customers who leave their service provider early.

As of 31 December 2011, rollover contracts will be banned, Ofcom confirmed this morning. It estimated that about 15 per cent of UK customers who sign up to a broadband and landline provider are tied to Automatically Renewable Contracts (ARCs).

The watchdog said it would require comms outfits to eventually shift all residential and small business customers off rollover contracts and over to alternative deals.

BT, AdEPT Telecom, Axis Telecom, eZe Talk, italk telecom, TalkTalk Business, Titan Telecom, Optimum Calls and others have been ordered to completely remove ARCs from the market by 31 December 2012.

“Ofcom’s evidence shows that ARCs raise barriers to effective competition by locking customers into long-term deals with little additional benefit. Our concern about the effect of ARCs and other ‘lock in’ mechanisms led to our decision to ban them in the communications sector,” said the regulator's chief Ed Richards.

BT said it was unhappy with Ofcom's decision and claimed its customers benefited from discounts granted as a result of offering them renewable contracts with the telco.

"We don’t believe there is any evidence that they damage competition, given that the UK telecommunications market is amongst the most competitive in the world," said a BT spokesman.

"We have worked hard to make sure that customers understand what they are signing up to, including how the renewal works and the charges that apply if they choose to leave early.

"In exchange for these terms, customers receive a significantly lower price, and as the renewal date approaches we contact them to give them 30 days' notice to end the contract without charge."

BT added that it would no longer be selling ARCs to residential customers now that the ban has been confirmed by Ofcom.

"We will be letting existing customers know over the next few months what BT can offer as an alternative, and we’ll aim to maintain the low prices we offer wherever possible, if customers want to stay with BT," added the spokesman. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Blockbuster book lays out the first 20 years of the Smartphone Wars
Symbian's David Wood bares all. Not for the faint hearted
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
This flashlight app requires: Your contacts list, identity, access to your camera...
Who us, dodgy? Vast majority of mobile apps fail privacy test
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.