Telecoms regulator Ofcom has laid out a range of new measures to help ensure mobile phone customers get a fairer deal from their operators, with new rules governing transparency and contract terms, and has forced new concessions on price cuts from most of the UK’s mobile operators.
The measures are designed to cut bills for out-of-contract customers and to put an end to the practice of selling so-called linked split contracts, in which handsets and airtime are sold separately, ostensibly to “help” consumers afford pricier handsets.
Lindsey Fussell, consumer director at Ofcom, said: “Our research reveals a complex mobile market, where not everyone is getting a fair deal.
“So we are introducing a range of measures to increase fairness for mobile customers, while ensuring we don’t leave existing customers worse off.”
Ofcom’s measures build on recently introduced European Union (EU) legislation designed to address some of the regulator’s concerns, which it said fell short of giving it the legal power to impose default tariffs, such as an equivalent SIM-only deal when out of contract.
It cited new research suggesting that enforcing default tariffs could leave some customers worse off. Indeed, Ofcom’s own analysis suggests this would be true for about a quarter of the two million consumers who are currently out of contract.
But when it comes to the other 1.4 million or so, being switched onto default tariffs would save money (up to £182m collectively every year), so Ofcom is taking a number of steps to make this easier for consumers.
First, it will bring forward the new EU rules that demand that customers entering a bundled contract be told the cost of buying the handset and airtime separately, so people can get a better idea of when they are likely to be able to move to a better deal.
The practice of selling linked split contracts of over 24 months’ duration will also be banned, reflecting Ofcom’s concerns that longer split contracts could make it harder for users to switch if they are still paying off their handset contract.
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The regulator has also forced new concessions from three of the UK’s big four mobile operators, as well as virtual operators Tesco Mobile and Virgin Mobile, to reduce bills for people who are out of contract.
Under the commitments, both EE and Vodafone will cut prices for customers who are more than three months out of contract, taking into account the savings from switching to a comparable SIM-only deal, while O2 will cut the monthly price of out-of-contract customers to the equivalent 30-day SIM-only tariff for its direct customers only. Tesco Mobile said it would reduce monthly charges for out-of-contract customers to the “best available” airtime tariff, and Virgin Mobile will also move customers to the equivalent 30-day SIM-only deal.
Ofcom had harsh words for Three, which has refused to apply any discount to out-of-contract customers. “As a result, these customers will continue to overpay and will not receive similar protections if they stay on their current deal,” it said.