Ofcom bans long-term broadband and phone contracts

13 Sep 2011

From December, landline and broadband contacts in the UK that automatically tie customers into long-term deals will be banned, British regulator Ofcom revealed today.

Ofcom today confirmed that rollover contracts, which tie landline and broadband customers into repeated minimum contract periods unless they opt out, will be banned from December this year.

The contracts, also known as Automatically Renewable Contracts (ARCs), roll forward to a new minimum contract period – with penalties for leaving – unless the customer actively opts out of the renewal.

The ban will apply to ARCs for landline and broadband services sold to residential and small business customers.

Removing barriers to switching

BT is the largest communications provider currently offering these contracts and Ofcom estimates about 15pc of UK residential consumers are on rollover contracts. Other residential providers include Adept Telecom, Axis Telecom, Eze Talk and iTalk, while TalkTalk Business, Titan Telecoms and Optimum Calls offer ARCs to business users.

Ofcom chief executive Ed Richards said: “Ofcom’s evidence shows that ARCs 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 increases fibre to 114 exchanges

In related news, it emerged that BT is upgrading a further 114 exchanges to fibre-to-the-cabinet technology.

The expansion would result in an additional 1m homes in the UK receiving 21st-century broadband connectivity.

BT has so far committed stg£2.5bn to its plan to bring super-fast broadband to two-thirds of homes and businesses in the UK by the end of 2015.

By next year, Northern Ireland will be one of the most fibre-dense regions in Europe, with deeper fibre penetration than the rest of the UK, France or Germany.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years