GADGETS HEAVEN: Ofcom

Sunday, 4 March 2012

Ofcom to Providers: Rollover on Unfair Broadband Contracts

Ofcom have banned so-called 'rollover' broadband contracts which automatically renew unless customers opt-out.

The regulator had previously indicated that it was concerned that rollover contracts make switching broadband and phone providers harder and more costly or stop consumers switching broadband deals.

As of December, customers won't be able to get tied into another long-term contract without their explicit consent.

By December 2012, those currently on automatically renewing contracts must have the terms of their deal changed.

Approximately 15% of British broadband and calls customers have an automatic renewal which imposes a fine for early cancellation unless the customer has previously opted out.

BT is, by far, the worst offender despite the fact that it's also one of the few providers still clinging on to 18-month contracts.

TalkTalk and Orange have both switched to 12-month contracts recently in an effort to attract more customers.

Paying the penalty

Customers with broadband and home phone contracts will typically have signed up for an initial 12 or 18 month period which then continues on a monthly rolling contract basis after the time is up.

If they then fancy switching to another provider, for example to a cheaper broadband deal, they would be free to do so without incurring a penalty for ending their contracts.

Those on rollover contracts find themselves contracted for a further 12 or 18 month period with the same supplier.

Meaning that, if they want to switch, they'd be liable to pay a weighty sum to escape the clutches of their rollover contract.

Welcomed by consumer groups

Consumer groups welcomed the regulator's ruling.

"Rollover contracts can be confusing and penalise customers," said a spokesperson from Consumer Focus.

In addition, automatic renewal has been found to act as a barrier to consumers who want to switch broadband or landline provider.

Senior policy advisor at Which? Dr Rob Reid agreed.

"We are pleased to hear that Ofcom has followed this policy line, one that Which? supports, despite many major telecoms providers pushing for ARCs to be maintained," he said.

Ofcom's removal of rollover contracts will open up the marketplace, making it more competitive and providing customers with the freedom to shop around.

Ed Richards, chief executive of Ofcom added that the regulator's evidence "shows that [automatically renewed contracts] 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."

BT bites back

BT has not taken the negativity surrounding its rollover line rental contracts lying down and has fought back saying it was disappointed with Ofcom.

A statement from the telecoms behemoth said, "Our customers tell us that they are happy with the discounts offered by these contracts and we don't believe there is any evidence that they damage competition...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 get a significantly lower price and as the renewal approaches we contact them within 30 days of the contract end date."

Julia Kukiewicz, Editor of Choose suggests consumers should weigh up the pros and cons of their broadband contract before signing up.

"Anyone signing up to a lengthy contract of any sort should make sure they consider the options presented to them carefully and ensure that they are aware of not only the potential benefits but also the potential pitfalls of 'rollover contracts'," she said.

"The last thing you want to realise when wanting to escape your current contract and switch to another broadband or phone provider, is that you are locked in for a further year and a half."

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Wednesday, 22 February 2012

4G Mobile Broadband: UK lags Behind as Ofcom Frets

SUPERFAST mobile broadband services won't come to UK shores until at least 2013, Ofcom has confirmed.

The regulator has set the sale of the 2.4Ghz and 800Mhz wireless bands for some time in 2012.

The regulator is taking plenty of time to get the auction process right despite calls from consumers and campaigners to push the process along to see the UK catch up with the rest of the world.

4G mobile broadband services are already available in several countries around the world including Sweden, USA, Japan and Mongolia. Germany also recently completed an auction of its 4G spectrum.

It's a fix

The UK's four mobile operators - Vodafone, O2, Everything Everywhere (Orange and T-Mobile), and 3 - are all expected to walk away with a very similar piece of the pie after Ofcom placed limits on the amount of spectrum any one company could acquire citing "risks" to future competition if less than four operators were successful.

These rules are believed to have been drawn up in order to protect 3, the mobile phone and broadband operator which entered the market in 2002 after spending collosal sums on 3G spectrum.

The company has yet to turn a profit in its eight year history.

3's Chief Executive Kevin Russell had demanded that the rules be put in place after claiming that, "there is a risk of a strategic premium being bid to squeeze 3 out of the marketplace".

3 is relying on the 800Mhz specturm, which delivers wireless over a much larger area, to help push its services out of built-up areas into rural ones.

O2 and Vodafone both already own 900Mhz spectrum and Russell, backed up by Everything Everywhere is calling for a limit to be placed on ownership of sub-1Ghz spectrum.

Osborne's payday

Although the irony of Vodafone contributing a huge amount of cash to the Treasury would have been enjoyable, sadly there shall be no repeat of the bonanza windfall the government recieved for the 3G auction in 2000.

That auction was held at the height of the dot.com boom and netted £22.5bn for the Chancellor.

Investment in mobile broadband services suffered as a result however, with mobile broadband networks not up to scratch until many years later and operators are keen not to repeat their past mistakes. This auction is likely to raise only a tenth of the previous one.

Another countryside con?

Mobile operators say they are aiming for 4G services to extend to 95% of the population roughly in line with 3G.

Whilst this may sound like almost complete coverage, due to the low population density of rural areas such as the Lake District it actually results in large swathes of the rural map without any coverage at all.

Rural broadband campaigners have been calling for next generation mobile services to finally bring superfast broadband and mobile reception to remote locations.

It is hoped that by utilising the longer wavelength of the soon to be redundant analogue TV, 800Mhz band, 4G mobile broadband services will get to places 3G couldn't.

Improved 4G mobile phone coverage will also deliver voice services for the first time in some places, meaning if you get stuck up Hellvelyn with a Yeti after you, you may be able to call for help witout having to send smoke signals.