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Broadband, Mobile & Energy News: Weekly Roundup 31/08/18


British Gas Fined £2.65m for Overcharging Mistakes and Malpractice

Energy giant British Gas has been fined £2.65 million by Ofgem for a variety of misdeeds and illegal practices.  Ofgem’s investigation, which was opened in June 2017, concluded that the firm be required to pay out over £500,000 in compensation to customers overcharged on tariffs, nearly £250,000 to those affected by wrongly charged exit fees, and over £1 million in fines to Ofgem.

Among the issues cited by Ofgem were that British Gas was wrongly charging customers exit fees, automatically switching customers onto more expensive standard tariffs, and wrongly informing others about the possibility of exit fees.  British Gas acknowledged the faults, blaming system errors and saying that those overcharged were “promptly refunded as soon as we identified the issue and were paid an additional goodwill gesture.”  Energy companies are required to provide a 49-day period in which customer can switch provider for free, but British Gas wrongly informed customers wishing to do so that they could still be charged in that period, dissuading them from exiting the firm.

Anthony Pygram, Ofgem’s director of conduct and enforcement, said: “British Gas failed its customers who were coming to the end of their fixed contracts and switched supplier by unfairly penalising them and applying charges in error.  Many more customers could have been deterred from getting a better deal due to the incorrect terms and conditions.  Our enforcement action against British Gas sends a strong message to all supplier that they must respect their customers’ rights during the switching window and always treat customers fairly.”

Brexit Poses a Risk to Country’s Internet Service Providers

According to new research published by the financial analysis firm Plimsoll Publishing, Internet Service Providers (ISPs) are among the top 10 industries most threatened by Brexit, especially in the increasingly likely event of a ‘No Deal’ exit.

Of the 227 ISPs analysed by Plimsoll, 79 were found to be ‘in danger’ – according to the firm, 90% of companies that they rate as such fold within 2 years.  The most obvious hit to the UK internet industry is the loss of EU funding for broadband projects, especially accessibility projects in more difficult to reach areas that aren’t commercially viable.  Individual customers are most likely to notice higher roaming charges in the EU – especially since most mobile plans have been rolled out EU-wide in the last few years.  The actual details won’t be known until the UK actually leaves, or a concrete plan is drawn up.

Christopher Evans, Plimsoll’s Senior Analyst, said: “The chances of the UK leaving the EU without a trade deal appears to have increased significantly of late.  While some openly welcome such an outcome, for many industries it will make a tough job even harder.  Many UK sectors rely on the frictionless trade and common regulations that being in the EU affords them, however, this could all change on Friday 29th March 2019 [scheduled exit date].”

O2 Launches New ‘DIY’ Mobile Phone Plan

The mobile operator O2 has announced a new mobile phone plan that allows the customer to customise both the benefits of the plan and the way of paying it.  The new plan comes with effectively unlimited minutes, but allows you to choose the monthly data allowance, as well as how often you pay and when, for a span of 3 to 36 months.  Even the upfront payment for a handset can be decided by the customer, who is also free to pay their way out of the plan to fulfil their contract if they wish to leave – the handset being supplied unlocked from the sim.  Data flexibility allows customers to choose a low limit for what they know might be a low-usage month, and the reverse for a high-usage one.

One downside of this plan is the difficulty it creates when attempting to compare against any other plan, whether from O2 or a rival provider, as it doesn’t easily fit into any categories.

Npower SSE Merger Provisionally Cleared by CMA

The Competition and Markets Authority (CMA), the government watchdog responsible for overseeing business competition, has provisionally given the go-ahead for the merger of SSE and Npower, two of the UK’s largest energy firms.

The plan, to merge SSE’s household energy division into Npower’s UK setup, was announced in November 2017.  The new provider would be the country’s second largest energy firm, after British Gas. The positives for the firms are based on administrative cost-cutting and the possession of even greater weight on the supply chain, allowing lower gas and electricity prices.  Analysing the move,  George Salmon, from investment firm Hargreaves Lansdown, said that “the combination with Npower means potential cost savings, and should help restore the benefits of scale that have been eroded by steadily declining customer numbers.”

The CMA launched an inquiry based on concerns over the impact that this would have on household bills, with one less competitor for major firms.  The watchdog has not found enough evidence that the deal would have a major impact on consumer tariffs, however, withdrawing its opposition to the merger.

Anne Lambert, chair of the inquiry group, said: “It is vital that householders have a range of energy suppliers to choose from so they can find the best deal for them.  With more than 70 energy companies, we have found that there is plenty of choice when people shop around.”

The deal is projected to be completed, at least on paper if not on the ground, by the end of the year, with SSE chief executive Alistair Phillips-Davies saying that he was “confident” that all would be sorted by the end of the financial year at latest (31st March 2019).

Steep Price Hikes One Day After Broadband Contract Conclusion

Broadband companies massively inflate prices as soon as a customer’s contract ends, according to new figures.  The worst offender, BT, raises its prices by 82%, from an average of £24.99 a month in-contract to £45.49 immediately after.  The average price hike for all providers of standard ADSL broadband is 62.5%, working out at about £150 a year.  Fibre is little better, with an average increase of 52.9%.

As it stands, broadband providers aren’t legally required to warn customers about their contract ending, so many accidentally end up paying far more than they were expecting.  According to uSwitch, 89% of broadband users said they’d look for a better deal if they realised that their contract was ending.  Ofcom, the communications watchdog, is currently looking at instituting rules that would required broadband providers to notify their customers that their contract was ending and that they were moving onto higher rates to avoid such an ‘awareness penalty’.