2018-08-22

OFCOM think people cannot use a diary?

OFCOM are working on some new rules to get telcos to actively tell customers when they are approaching the end of their minimum term on their contract. Obviously this has meant some debate on twitter, so some of the following address some comments I have seen rather than just the OFCOM proposals.

A good idea?

First off, I can see some people may be helped by this. I could see it being something we might do ourselves without OFCOM rules. However, I could see issues to be honest. If we were to email and explain that once you are reaching the end of the minimum term there may be other tariffs available then suddenly that email could be regarded as a marketing email (after all OFCOM seem to be designing this to make people consider other options) . We don't send unsolicited marketing emails, so I suspect if we started doing this we would run in to issues and complaints (largely from people that can use a diary).

But to be fair, how hard is it for someone to simply put a date in their diary (iPhone, paper, whatever) if it matters to them. Making telcos operate a diary service seems overly "nanny state" even for OFCOM.

Is there a problem to solve?

Well apparently people are "over paying", or so people tell me on twitter. This is, of course, not the case, people are paying what they contractually agreed.

The fact that, after the minimum term, they may have more readily available choices to change to other tariffs or suppliers and get a cheaper or different service, is not a matter of "over paying" at all. It is a matter of their choice to look around at other options or not.

Interestingly, businesses have relied on general apathy for a long time - well before telcos, we had TV rentals businesses which were known for renting a TV at a price, and the same TV still being rented decades later for the same price even though newer, better, and way cheaper options were available. The business model relied on apathy! People always had the choice to shop around, but simply chose not to. Yes, for the young out there, people actually rented TVs, it really was a thing. They used to rent telephones (landline) as well!

So, yes, I can see that there is some apathy, and that it may be better for consumers to be prompted, or perhaps just educated to use a diary.

I do, however, take issue with "over paying". People are simply paying what they agreed, and not a penny more. Telecoms (and especially Internet Access) varies a lot and there are different prices for different services. Someone paying more than they could be on a different package or supplier does not even mean they are not getting "value for money", let alone mean they are "over paying".

Why this seems odd to me?

One of the issues in twitter debate is that it seems clear cut to me - you agree a contract, and it may have prices or means by which price changes are agreed or notified, and minimum terms, and so on, and as long as everyone knows those terms and agrees them, there is no problem.

When doing business I am very keen to ensure contract terms are clear and agreed. The most annoying (and thankfully rare) type of disputes we ever see are where there has been some misunderstanding of the terms, and I always try to work out how we can avoid such misunderstandings in future and make things clearer and more obvious where possible. Obviously I also try to ensure terms are as fair and reasonable as we can - which also helps avoid misunderstandings.

I would never want to trick a customer or have some obscure clause to catch them out.

I am told this is not always the case, and hence the reason for moves like this from OFCOM. However, there are already requirements about consumer contracts being “reasonable”, and The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 already require a trader to give a consumer “the minimum duration of the consumer’s obligations under the contract” before the consumer is bound by the contract. So really, is expecting people to understand how to use a diary that odd?

"End of contract"

This really annoys the hell out of me, much like people selling services with "no contract".

This is about a "minimum term" aspect to a contract. These contracts (almost always) do not "end" when the minimum term is reached. All that it means is that before that point ending the contract is more onerous (may involve some extra fee), and after that point ending the contract is less so. It may still have a cease charge, or a notice period, or a requirement to return equipment, but will typically be less onerous than during the "minimum term". That is all.

In our case, (A&A), during the minimum term, ceasing the service has a charge per remaining month of that term (normally a lot lower than the full charge for the service), but you can obviously still end the contract should you wish.

It is quite possible that options to change to other tariffs are not impeded by being within the minimum term. So one of the supposed issues may be a non issue for some ISPs anyway.

But please do not talk of being "in contract" and "end of contract" when talking about a "minimum term" clause to an ongoing contract. It is misleading and helps perpetuate a common misconception.

Not just consumers

OFCOM have a history of this, but they are including "small businesses" in these rules. This seems odd as consumers and businesses have very different protections in law, and especially "nanny state" stuff. A business should clearly be expected to read the terms and understand them, and decide what is in its best interests - they are, after all, running a business. OFCOM want these "nanny state" rules to apply to such small business customers as well.

It really is not clear why, as anyone going in to business (small or not) should understand what the are doing.

What will A&A do?

Obviously if OFCOM make a new rule, we will follow it.

We already allow changes to tariffs within minimum terms for broadband quota, and in some cases line upgrades (starting a new minimum term). We already offer services with 1 month minimum term, and 6 month minimum term, as well as a 12 month option, for a lot of services. Only those above 6 months are in scope of the new OFCOM rules. Some services simply have no minimum at all, not even 1 month. So actually, only a few of our services will need anything, but it is likely to be a suitable email at the appropriate point, and may apply to all broadband services as they approach the minimum term. That said, I plan to make it simple and informative (within OFCOM rules) rather than anything marketing. To be honest I would rather just include it as a line on the emailed bill, but that will depend on what OFCOM actually require in their new rules. That saves an extra annoying email being sent.

Better solution

Personally I'd rather we did not have to require any minimum term on anything. It is a complex mess, and starts with carriers and how they charge us.

That said, some people would rather trade off a free router and install for having a 12 month term.

This does, of course, raise other questions - people considering that their mobile contract rate and minimum term is to "pay off the phone" and so once over they are being "over charged" if they stay at the same rate. These contracts do not say that, obviously. It is just the rate they agreed, not over charging. But, a bit like us, we are taking a hit on the initial invoices in terms of covering install and routers and basically not making the profit we want until the minimum term ends - the fact we charge people that pay up front for install and equipment the same rate as those that have a minimum term fits with that being the rate once the minimum term ends. We are doing this to help customers join our service in the hope they will stay once the minimum term ends. So it is not always quite as simple as "paying off a phone" (or router and install)...

Other industries

I recall someone coming to my door with the line "you have been over paying for electricity". My reply was a simple "good, I'll look forward to the refund arriving". Of course I had not been over paying at all, I have been paying my supplier exactly what was agreed. He was trying to sell a different electricity supplier that may have been cheaper but may have had different terms or requirements or customer service quality or so on. He did get annoyed when I stuck to my line of wanting a refund for what I had over paid until forced to admit I had not done so, and then I told him to sod off.

Of course, for electricity, it is the same stuff you are buying. But is it? As it happens we have moved to a "green" supplier, as I feel it appropriate given how much we are using to charge an electric car (my son's). A&A offices are also on a green tariff. We may as well encourage the renewable energy industry for all our benefit.

9 comments:

  1. I agree that people are just paying what they agreed, but AA are a little different from most other ISPs, you offer a price for a product that, while at the upper end of the market, is fair for what you deliver and is open and clear.

    Most ISPs offer massively loss leading initial prices that then go up by, sometimes as much as 100%, after an initial period. It's dishonest and annoying, and leads to "loyal" customers cross subsidising others.

    Personally I have it in my calendar to phone up my ISP and haggle with them every 12 months. I'd rather not bother with this, but every year I get about £15/month off by doing so.

    If other ISPs did not do this there would be no need for people to care about when their contract ends.

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    Replies
    1. Agreed. A&A haven't been able to quite tick the boxes for mobile yet (In short, need European roaming. I don't need stellar support for my mobile). Vodafone do an annual contract price jack, and if you don't call them up and tell them you're leaving then they'll charge you way over the odds.
      I've actually moved to PAYG as I'm fed up of the bullshit

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    2. We have voice SIMs with EU (and world) roaming.

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    3. I should correct that to "Free" European roaming. In short I use considerably more data on holiday than I do at home.
      In short I'll be paying three 0.0017p / mb, and you're charging 10p / mb. IE for the allowance from a £20 topup A&A would charge £1,200. (Actual usage will probably be 2-3gb, which is still £200-300)

      I fully understand that three are likely making a loss due to EU roaming (They'll cross subsidise this against more expensive UK calls / data), and the A&A way is you pay for what you use. And I really do like A&A's approach, but I'm sure you can see that this isn't economically viable as a consumer.

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    4. Ah, fair point. The data is not cheap I agree. Personally I am using WiFi most of the time, and when roaming and traveling it is not a lot of data, so works really well for me. But people's usage varies, obviously.

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    5. Last trip was a mix of camping and airbnb covering about 3000 miles. (Norway and Sweden has awesome 4G coverage, even in the arse end of nowhere). Some had wifi, some didn't.
      So also a decent amount of general browsing and keeping up with the world.
      We also booked a load of airbnb's while on the road when the camping turned out to be less idyllic than we anticipated.

      I also used google maps (With offline maps) to get around. Before low cost roaming it was an offline satnav which I don't bother with any more. Partly my usage is high because it's cheap. I could reduce my usage, but getting around is easier with it.

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  2. How about just making it opt out at time if registration?

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  3. What if Ofcom mandates a multi channel notification service about this? Lets say for example they require telecoms companies to notify by email and by letters too. What would A&As' stance on this from a logistical point of view for the latter? Use a franking machine, printed postage impressions for Royal Mail. Or even perhaps partner with another postal company, including but not limited to; whistl, ukmail and securemail as they are not bound by the universal service and therefore can be cheaper. No doubt whatsoever the price per customer would be insignificant if that is the case, but it is definitely a inconvenient strategy if Ofcom requires it, let alone multiple multiple notification letters to remind the customer. Companies House do this I hear, send multiple 'reminders' despite the fact that the accounts they need made up to (for the most part) are public record.

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    Replies
    1. Well, the problem will be the likes of BT give you a BT Email address when you sign up and will send you notice to the BT Email address. So they'll use that as a convenient dodgy (You're contractually obliged to read it...). Makes for a nice dodgy if you want to send a notice which aren't going to be read my many people...

      That's going back a few years, but i doubt the situation has changed.

      IMHO, makes more sense to enforce this if you've got a customer in on a cut-rate deal, or the price has increased over the duration of the deal.

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