Subscribers to Shell Energy’s broadband service will no longer face a £15 cease fee for departing the service after the ISP overhauls its terms and conditions in the next few months.
Currently, Shell Energy Broadband slaps all customers switching away from their service £15, including those who are outside their minimum contract term.
Early termination fees are common in the broadband market, with ISPs penalising customers who duck out of their contracts early, usually by charging a percentage of their monthly fee for the remainder of their contract term. But Shell Energy Broadband is thought to be the only broadband provider on the market levying an exit fee on customers who are out of contract.
Ofcom has been probing Shell’s cease fee over concerns it dissuades customers from switching.
Under Ofcom rules, if an internet provider is charged a cease fee by a wholesale provider, they can pass those charges on to the consumer. However, Ofcom said there are circumstances under which these wholesale charges may not apply.
“Any charge that could put someone off switching would be a concern for us,” the regulator told a consumer site earlier this month.
"While providers can charge some fees in limited circumstances, cease fees are now very uncommon. So we are asking Shell to explain its rationale for these charges, so we can be confident customers are being treated fairly.”
Shell Energy Broadband has said it inherited the cease fee from First Utility when it acquired the business in 2018. The ISP has maintained that it is within its right to charge the cease fee, and discussions continue between Shell and Ofcom.
However, Shell Energy Broadband has now confirmed that it will scrap the fee. It maintained that this decision was not motivated by Ofcom’s investigation but in response to its acquisition of Post Office’s broadband customers.
A spokesperson for Shell said: “The cease charge relates to a charge from our network partner which is passed through to customers. We've been reviewing this alongside all our policies, especially in advance of our acquisition of Post Office's business, and we will be removing it going forward as we bring the two businesses together and absorbing the cost on behalf of our customers.”
Shell emerged as a surprise bidder for Post Office’s broadband business last autumn. In February, it beat out internet giants Sky and TalkTalk to acquire Post Office’s 465,000 home broadband customers for an undisclosed sum (rumoured to be between £80 and £100 million). The acquisition will quadruple Shell Energy Broadband's customer base to just over 600,000.
Shell is, of course, best known as an oil and gas major. It entered the UK energy supply market in 2018 when it acquired First Utility. It’s since rebranded that business as Shell Energy and sells electricity offset by Renewable Energy Guarantees of Origin (REGO) certificates. However, Shell has been accused of greenwashing its ongoing excavation of fossil fuels with the supplier.
When it gobbled up First Utility, Shell also took on its broadband business. While this seemed incidental at the time, Shell’s purchase of Post Office’s broadband business shows it has wider ambitions in the telecoms market.
Shell hasn't specified exactly when its new broadband terms and conditions, without the cease fee, will take effect and said customers who have already been charged the fee will not be refunded.
Customers who leave before their 18-month contract is up will continue to face early cancellation fees. These are set at £6.50 per month for the ADSL "Fast Broadband" service, £16.50 per month for its FTTC "Superfast Fibre" plan and £18.50 per month for its faster "Superfast Fibre Plus" tariff—for all the months remaining in your contract.
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