How GDPR might help consumers switch contracts


22 Oct 2018333 Views

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William Fry’s technology team explains how UK rules enabling consumer contract challenges under GDPR could spill into the Irish market.

In July 2018, Ofcom (the UK’s equivalent of ComReg) announced plans to require communications and utilities providers to inform customers when they are nearing the end of their contracts.

“Many landline, broadband, mobile and pay-TV deals in the market today are offered on contracts with a minimum term of 12, 18 or 24 months,” Ofcom noted. “We want people to be able to take advantage of the wide choice of communication services available and shop around with confidence, so that they can get the best deals for their needs.”

Customers usually cannot leave their contracts during their initial term without paying a termination charge but, once this term has expired, customers are often switched with no notice to a rolling contract. According to Ofcom, this can result in a loss of benefits received during the initial term while also being charged higher prices.

Ofcom has proposed that providers will have to notify their customers in advance of the end of their contract term to give them enough time to “act effectively”.

Data portability in the UK

The Ofcom recommendation follows a wider campaign to encourage competition by making it easier for consumers to switch contracts. Recently, the UK Government launched its Smart Data Review, a new data portability initiative, seeking to make use of the personal data that communications and utilities companies hold on customers. It was hoped that the data could be used to develop a range of new services to improve the consumer experience, such as automatic switching services and utility management tools that consumers can use directly via the proposed Smart Data Hub.

But the provision of such services and tools depends on access to customer data and, quite understandably, many communications and utilities providers are not particularly eager to share data on consumers’ current tariffs, usage rates and other pricing deals.

However, under Article 20 of the General Data Protection Regulation (GDPR), data subjects now have a right to data portability. This right allows for data subjects to obtain personal data that a data controller (such as a communications or utility provider) holds on them and to reuse it for their own purposes – which can include requiring that it be transmitted to another entity to assist with finding the best deals available in the market.

The Article 29 Working Party (now the European Data Protection Board) has issued guidance in which it referred to the right of data portability as “supporting the free flow of personal data in the EU and fostering competition between controllers”. The UK scheme, in essence, is putting the guidance into practice and now hopes to build a process of improving the consumer experience in regulated markets. It appears to see itself as kick-starting the development of a consumer tool hub built on the new GDPR right to data portability (a right echoed in the UK’s Data Protection Act 2018, which will mean it is likely to survive even the hardest of possible Brexits).

Changes for Ireland on the horizon

In Ireland, although there have not been any similar initiatives yet announced, it is likely only a matter of time. Helen Dixon, the Irish Data Protection Commissioner, has spoken about how the right to data portability under the GDPR will lead to a “big change in industries such as banking, insurance, utilities and telecommunications” while also leading to an “increase in competition”.

In Ireland, the current market practice has not always been easy for individuals that may wish to switch service providers, with the process often involving having to submit a new and complete information packet to the competitor in order to negotiate a better rate. As this takes time and a certain degree of effort, many consumers are less likely to pursue transacting with new companies, preferring instead to continue with the established company from which they already receive services.

However, if Ofcom’s calls to actions in the UK are taken up and the Smart Data Review achieves its objectives, we should expect similar processes to be launched in Ireland in the near future, assisting consumers to utilise their new data protection rights to explore options with different service providers.

While the GDPR has created new consumer options for individuals, there are new opportunities for businesses, too. More transparency is likely to create a more level playing field as new customers will be available that may previously have been put off by the bureaucracy, paperwork and overall difficulty, if that can be significantly reduced.

Businesses that develop the best means to respond to data portability requests, together with strategies for approaching the inevitable market shifts that will result, will be at a distinct advantage over their competitors in the coming years.

By David Cullen, John O’Connor and Leo Moore, with Alex Towers contributing

John O’Connor and Leo Moore are partners in William Fry’s technology group, which is led by partner David Cullen. Solicitor Alex Towers also works with the technology team, which advises Irish start-ups and established international brands on technology matters such as data protection, intellectual property, licensing, outsourcing and e-commerce.

A version of this article originally appeared on the William Fry blog.