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.
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)...
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.