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Price of cheap broadband deals rises by £100+ at end of contract

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Written by: Paloma Kubiak
11/04/2017
Consumers on the cheapest basic broadband deals are hit with an average price rise of £113 a year once their deal ends, with many unaware of the hikes, according to a charity report.

More than a third of broadband customers don’t realise they face price hikes – or a ‘loyalty penalty’, according to Citizens Advice, by staying on the same contract with their provider after the initial deal ends.

Analysis of the cheapest basic broadband deals from five of the largest suppliers (BT, Virgin Media, Talk Talk, Sky and EE) found that prices go up by an average of 43% or £9.45 a month at the end of the fixed contract. This adds an additional £113 a year to a customer’s bill.

But a third (35%) of broadband customers don’t realise they could face price hikes by staying on the same contract after the initial deal ends. And with the average broadband customer staying on the same contract for four years, customers are paying the price when it comes to loyalty.

Here are the charity’s findings of the initial monthly price of a fixed contract and subsequent monthly price of suppliers’ cheapest basic broadband deals:

  • BT’s 12-month basic broadband deal cost £24.49 each month, rising to £40.99 after the fixed contract period. This represents a 67% increase, costing users £198 extra a year.
  • Virgin Media’s 12-month basic broadband deal cost £32.25 each month and remains at this price after the end of the contract so customers see no change in pricing.
  • Talk Talks 24-month basic broadband deal cost £20 each month, rising to £25.50 after the fixed contract period. This represents a 28% increase.
  • Sky’s 12-month basic deal costs £18.99 and rises to £28.99, an increase of 53%. This means customers pay an extra £120 in an ‘annual loyalty penalty’.
  • EE’s 18-month basic broadband deal cost £21 each month, rising to £28.50 after the fixed contract period. This represents a 36% increase, costing users £90 extra a year afterwards.

The extra amount people are charged once their initial contract period ends has also increased over the last six years. In 2011, research found consumers were paying on average £1.58 or £1.84 a month extra depending on their broadband connection. Now the average price hike is five times more at £9.45 a month.

Citizens Advice wants broadband providers to help customers avoid loyalty penalties by being much clearer about how much their services will cost after the initial fixed deal ends. It wants to see providers include up-front information in advertising and when people take out the contract – instead of details only in the terms and conditions – and texts when the fixed price comes to an end.

The charity also believes extra protections are needed for customers who are more vulnerable as older and poorer customers are more likely to face a loyalty penalty because they stay with the same supplier for longer.

‘Loyal customers stung by big price rises’

Gillian Guy, chief executive of Citizens Advice, said: “Loyal broadband customers are being stung by big price rises once their fixed deal ends.

“People often choose their broadband deals based on the price that works for them – but our evidence shows that many do not realise the price will rise after the end of the fixed deal.  With people staying with their supplier for an average of four years, these extra costs can run into hundreds of pounds.

“Older customers and those who have less money are more likely to stay with their supplier for longer meaning their loyalty penalty could reach over a thousand pounds.

“The government has rightly put energy firms on warning for how they treat loyal customers – the actions of broadband firms warrant similar scrutiny. Extra protections for vulnerable consumers are also a must.”

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