New research from Which? shows the extent to which broadband providers raise prices for loyal customers.
The consumer group Which? has published a new study surveying customers of the 12 biggest broadband providers. They looked into not only customer satisfaction, but also the price increases incurred when customers remain with a provider after their initial contract ends.
According to the study, most customers will remain with their internet service provider for at least three years. However, this type of loyalty isn’t rewarded. Instead, new customers pay, on average, 15% less than customers who have stayed with a provider after an original contract has ended. It has been found that some customers are even paying as much as 89% more.
Despite having the most loyal customers out of the 12 providers surveyed, those who stay with TalkTalk after their original contract is over, pay over 15% more than new customers. For those on TalkTalk’s Faster Fibre Speed Boost deal, their price will increase by 54%, a rise “from £25 a month to £38.50 after the 18-month contract period ends”. Over a year, this is an increase of £162.
Alex Neill, managing direct of home services at Which?, said: “Broadband customers will be outraged to discover that their reward for loyalty is often a substantial price hike, with no improvement to the quality of service they are getting.
“Suppliers should fight hard for your loyalty, not take it for granted. No one should be putting up with an internet service they are not happy with. Anyone who thinks they might be out of contract should look to switch to a better deal”. Neill also reminds consumers that by spending a few minutes shopping around various broadband providers, you could save your households hundreds of pounds every year.
Which? also found that around eight in ten BT Broadband customers remain with the provider for three years or longer. As with TalkTalk, BT has a high price increase from the introductory offer to standard contracts. BT’s standard broadband package “rises from £24.99 to £32.99 after 18 months—a 32% hike and £96 more a year.”
Similarly, Sky Broadband customers can look forward to a 42% increase when switching to the standard contract, with a potential increase of 50% if customers are on the Unlimited Broadband Package.
However, it is Virgin Media who has the worst price hike for customers who stay after the end of their original contract. Virgin customers “pay 52% more on average than they would as a new customers”. For those on the VIVID 100 fibre deal, the price rises by 74%, which totals a huge additional cost of £240 a year. Virgin Media also “achieved a satisfaction rating of just 59%”, making it one of the least popular providers.
The study also reports that the “biggest one-off price increase was from the Post Office”, with an increase of £169 a year on its Unlimited Broadband package. However, their introductory offer is also “currently the cheapest deal on the market”.
While it is natural for discounting to occur to keep the industry competitive, broadband suppliers should also be making “their post-contract prices completely clear; ideally right alongside the discounts”. Some ISPs, like TalkTalk, do offer customers the options of re-contracting onto a lower price point; and customers are also encouraged to haggle prices when renewing a contract.
Greg Mesch, the CEO of CityFibre, said: “It’s unacceptable that so many broadband customers get such a raw deal, paying over the odds for poor connections and being put off from switching by too-good-to-be-true offers that tie them in but don’t improve their speed”.
In 2019, Ofcom’s new rule requiring broadband ISPs “to inform customers when they approach the end of their minimum contract term” will come into effect. The government’s Competition and Markets Authority also opened a ‘super-complaint’ into this pricing practice.
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